Morningstar's Manager Check Up

REAFFIRMED RATINGS: Morningstar's Jonathan Miller explains how fund analysts rate Sanlam Global Financial, Baring Hong Kong China and Kames Ethical Cautious Managed

Jonathan Miller 3 May, 2017 | 11:06AM
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Jonathan Miller: Welcome to the Morningstar Manager Check-Up, where this week we start with the Sanlam Global Financial fund. Kokkie Kooyman’s been the manager since launch in 2004, and we’ve got a high opinion of his analytical expertise. There’s also a reasonable level of analyst resource for a sector-specific offering, so we believe there’s a solid setup.

Kooyman’s process involves buying undervalued stocks given their growth prospects, including turnaround stories. This takes him into emerging markets and small caps. So the result is a portfolio that’s removed from the benchmark, meaning volatility over shorter-term time periods. For those comfortable with those risks in a dedicated financials fund, we believe this is a strong offering and the fund keeps its Morningstar Analyst Rating of Bronze.

Next is the $1.8 billion Baring Hong Kong China fund, run by Laura Luo since 2013. We’re positive on Luo as a fund manager, but we’ve seen process changes in recent years, brought in at the house level. The latest ones being down to a new global head of equities who’s implemented further criteria into the research side. There’s also been turnover in the analyst team directly supporting Luo. Even though she continues to target quality growth companies trading at a reasonable price, we need to gain comfort in the investment process that’s been frequently modified, so the fund’s Analyst Rating remains at Neutral.

Finally, Kames Ethical Cautious Managed. It’s been run by Audrey Ryan and Iain Buckle since launch in 2007, and they respectively run an ethical equity and ethical corporate bond fund. The strict screening removes about 35% of the FTSE 100, there’s then a similar exclusion rate on the corporate bond universe. What’s more all gilts are excluded.

The top-down part of the process is driven by the house view, then at the bottom-up level Ryan and Buckle’s ideas are implemented with risk and lack of overlap in mind. Given the ethical nature, performance can be impacted when areas such as mining, and bank stocks do well, as they did last year. But over the long term we see this as an attractive ethical offering and the fund retains is Analyst Rating of Bronze.

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
Barings Hong Kong China A USD Inc918.44 USD-1.10Rating
Denker Global Financial A Acc49.78 USD-0.90Rating

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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