3 Funds Due a Bounce Back

These funds have been awarded gold, silver or bronze ratings by Morningstar analysts - but have recently underperformed their peers. Could they be due a rally?

Emma Wall 31 July, 2014 | 2:29PM

Even the experts underperform expectations – and the market – some of the time. Star managers Neil Woodford, Anthony Bolton and Richard Buxton have all had periods of poor performance, and if you had been savvy enough to invest during those lows you could have made a considerable return.

Morningstar analysts take a long-term view when rating funds. Using a “Five Ps” checklist, they examine a fund’s people – the fund manager, parent – the investment house, the investment process, the price and the performance. In this way the fund’s rating is qualitative and can make informed summations about the future, rather than basing a rating solely on performance, which is backward looking.

Flipping investments and portfolio churning is best left to the professionals, taking a long-term view ensures you are not tempted to panic sell when performance dips and crystalise losses. Using Morningstar’s Fund Screener, investors can screen a fund’s qualitative analyst rating and quantitative star rating to identify those funds which pass the Five Ps test – but have recently underperformed the market. Could these three funds be due a bounce?

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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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Franklin UK Smaller Companies A Inc10.79 GBP-0.56
M&G Recovery GBP A Acc246.88 GBP-0.30
Neptune Global Equity A Acc GBP6.16 GBP-0.79

About Author

Emma Wall  is former Senior International Editor for Morningstar

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