Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: Morningstar fund analysts downgrade L&G's index-linked gilt index fund and Neptune Russia and Greater Russia

Morningstar Analysts 20 February, 2017 | 4:08PM
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L&G All Stocks Index-Linked Gilt Index – Neutral

Jose Garcia-Zarate

Investors simply looking for a low-cost, expertly managed and tightly-tracking index fund to gain all-maturity exposure to the market of UK government inflation-protected bonds, can be confident that this fund fits the bill. Ultimately, however, we must conclude that the very high duration of the underlying market means that the lack of flexibility of a passive approach can prove a distinct disadvantage at times. The fund may do well relative to investment category peers – both passive and active – in isolated periods, but over the long term this is unlikely to translate into above-average returns. In the context of the Morningstar Analyst Rating framework, this befits a Neutral qualification.

Neptune Russia & Greater Russia – Neutral

Lena Tsymbaluk

While we acknowledge Robin Geffen’s experience in Russian equities, the heightened analyst team turnover at the firm and the fund’s risk profile has reduced our conviction in its ability to outperform. Within its Morningstar category, there are peers who have evolved their process to set limits on sector deviations as a way of mitigating against some of the risks in the Russian market, and this has not been a consideration here.

These limits have worked effectively at peers, making for a better investor experience, and hence this gives us pause. Overall, with the team undergoing changes and struggling to compensate investors for the extra risk being taken in an already risky market, our conviction in the fund’s ability to outperform has waned.

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
Liontrust Russia A Acc GBP4.06 GBP-8.34Rating

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