Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: Comgest Growth Mid-Caps Europe, Fidelity Asian Smaller Companies, JOHCM Japan and five Pioneer Investments funds

Morningstar Analysts 13 December, 2016 | 12:36PM
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New Ratings

Comgest Growth Mid-Caps EuropeBronze

Mathieu Caquineau

This fund is managed by a team of three portfolio managers appointed in 2012 and in 2015. While their cooperation may be recent, the fund’s foundations are strong. Like all Comgest funds, this strategy is managed in a truly collegial way whereby the three managers rely on a close-knit team that includes five other experienced managers/analysts dedicated to European equities. The investment process reflects the firm's time-tested approach, one solidly geared to high-quality growth companies with a focus on small and mid-caps. The disciplined execution of this distinctive strategy has led to strong risk-adjusted returns in the long term.

Fidelity Asian Smaller CompaniesBronze

David Holder

In Nitin Bajaj we believe that this fund benefits from a high calibre fund manager backed by substantial regional resource. We consider his disciplined stock specific investment approach to be well executed and over the longer term we would expect this approach to add significant value for investors. We have a high regard for Bajaj and his consistency of approach, which is reflected in the impressive performance profile of both this fund and the Fidelity Asian Values investment trust that he manages in an identical manner. The overall merit of the proposition gives us a material level of confidence in the fund.

Downgrades

JOHCM JapanNeutral

Peter Brunt

After an extended period of poor returns from 2013 to the end of October 2016, the fund is now behind its Topix TR benchmark and the Japan Flex-Cap category average over three and five years, and throughout McGlashan's tenure to the end of October 2016. With such a flexible and relatively concentrated bottom-up stock-picking approach, we expect the fund to experience periods of volatility over the short term, even relative to this category. Recent underperformance has been driven by an overriding macro call made in 2013, however. The managers positioned the portfolio in the belief that Abenomics would result in a strong cyclical upturn. As the market has rewarded other areas of the market, the managers now find themselves with a portfolio that exhibits clear value characteristics, which is a departure from its normal style profile. Indeed, where stock selection was historically the largest driver of returns, recent returns have been overwhelmed by style. While acknowledging the managers' experience, the drift in style has decreased our conviction in their implementation of the process.

Ratings Moved to Under Review

Pioneer Funds Euro Aggregate Bond

Pioneer Funds Euro Bond

Pioneer Funds Euro Corporate Bond

Pioneer Funds Global Aggregate Bond

Pioneer Obbl Euro a Distribuzione

Pioneer Investments announced on December 7 that Tanguy Le Saout, head of European fixed income, and Ali Chabaane, head of portfolio construction, have been suspended. This suspension follows an internal investigation that concluded Le Saout and Chabaane had allegedly acted against the commercial best interests of the firm by seeking to launch a competing asset-management company. We think the suspension is a serious event that warrants a reassessment of the funds' investment merit. As a result, we have placed the Morningstar Analyst Ratings of the above five funds under review. We will be meeting with the fixed-income team in due course and will continue to closely monitor the potential impact of these departures on the process and portfolio positioning of the funds.

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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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Comgest Growth Eurp Smlr Coms EUR Acc40.31 EUR-0.41Rating
Fidelity Asian Smaller Coms A-Acc-EUR32.95 EUR0.99Rating
JOHCM Japan B GBP  

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