Morningstar's Manager Check Up

REAFFIRMED RATINGS: Morningstar's Jonathan Miller explains why analysts positively rate M&G Global Dividend, Fidelity Special Situations and JOHCM UK Equity Income

Jonathan Miller 11 January, 2017 | 10:10AM
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Jonathan Miller: Welcome to the Morningstar Checkup where we keep you informed of the latest views of our fund research team. This week, we're covering three funds where we've maintained a positive view, some of which have gone through a tough period.

So, we'll start with the JOHCM Equity Income Fund that's maintained its Morningstar Analyst Rating of Silver. The managers Clive Beagles and James Lowen only hold companies that yield more than the FTSE All-Share Index. Their analysis also hones in on valuations with a leaning towards small and mid-caps. This does actually add to the fund's volatility where invests out-of-favor areas.

While this might feel uncomfortable for some, overweight in energy and mining actually helped performance in 2016. The duo think defensive areas are overvalued. So, it's worth noting, this fund looks very different to the index and its peers. Most notably, with no holdings in tobacco stocks, which has been a darling of the income space.

Next up is a £3 billion Fidelity Special Situations Fund where the manager Alex Wright has just hit his three-year anniversary on the fund. We've reaffirmed our Morningstar Analyst Bronze rating. This is a value style looking for turnaround situations which Wright looks to identify at an early stage. There's a large amount of flexibility and the overweight to the mid and small-caps plays to Wright's strengths. And he also has the backup of a 40-strong analyst team.

Finally, the M&G Global Dividend Fund with nearly £7 billion under management. The aim here is to grow the dividend with a bottom-up approach selecting stocks into three buckets; quality, assets and rapid growth. The fund's more cyclical exposure is higher than its peers and it's got a higher allocation to mid-caps which does increase the volatility.

This meant a rough patch in 2014 and 2015, but we stuck with our view and the bounce back last year saw a return of 40%. Meaning, over the long-term, the fund continues to outperform its index. It also maintains its Morningstar Analyst Rating of Silver.

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
Fidelity Special Situations5,164.02 GBP0.21Rating
JOHCM UK Equity income B GBP Acc4.59 GBP0.02Rating
M&G Global Dividend GBP A Acc490.18 GBP0.17Rating

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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