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Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: This week Morningstar analysts upgrade the iShares Global Water ETF but it's downgrades for two BlackRock funds

18 June, 2019 | 9:05AM

Upgrades

Barings Europe Select – Gold

Jonathan Miller

Barings Europe Select has had Nick Williams at the helm for nearly 15 years. He designed the process for this small- and mid-cap offering that has brought consistency in looking for unrecognised growth opportunities in high-quality, well-run companies. This has been meticulously executed over the years, showing he has what it takes to navigate both up and down markets. Corporate change at Barings hasn’t disrupted continuity here so, with standout attributes, the strategy has been upgraded to a Morningstar Analyst Rating of Gold from Silver. 

iShares Global Water ETF - Silver

Kenneth Lamont

This exchange-traded fund has proved itself to be one of the best options for investors seeking global water exposure. The large fee differential between this ETF and the average active peer translates into a sustainable advantage over longer time horizons. With 50 holdings, this ETF is the broadest and most representative index-tracking fund in the water equity sector Morningstar Category. The fund has performed strongly, appearing in the top quartile when ranked against surviving category peers (mostly actively managed) on a risk-adjusted basis over 10 years.

This fund’s expense ratio of 0.65% is substantially lower than its peers and similar to the only other passive option providing similar exposure. iShares has a seasoned passive management team befitting of the dominant ETF provider in Europe. The team can leverage market-leading technology while managing its funds. For these reasons, this fund has been upgraded to a Morningstar Analyst Rating of Silver from Bronze. 

Downgrades

Alken Absolute Return – Neutral

Francesco Paganelli

We have lowered the Morningstar Analyst Rating of Alken Absolute Return to Neutral from its previous rating of Bronze. Investors continue to benefit from fund manager Nicolas Walewski’s solid stock-picking ability here, but the process adopted on this long-short equity strategy has weaknesses, particularly in how it manages risks. With fees remaining relatively high, a mixed track record, and some changes to the approach that give us pause, our conviction in this strategy has weakened. 

BlackRock Gold & General – Bronze

BGF World Gold – Bronze

Peter Brunt

We continue to see positives in the form of an experienced manager, stable team, and structured approach. Significant changes to the investable universe and benchmark further limit the ability for a Ucits-compliant portfolio to add value on a large part of the market, however. This lowers our level of conviction in the strategy's ability to consistently outperform. The Morningstar Analyst Rating is therefore lowered to Bronze from Silver. More on the BlackRock Gold and General fund downgrade here. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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