Jonathan Miller: Welcome to the Morningstar Manager Check-up, where we share some recent updates from our fund research team.
Robeco Emerging Stars Equities has had Jaap van der Hart as manager since 2006, but he’s been part of the team since the year 2000. There’s stability here and the strategy is well-structured. It starts with a country top-down assessment whereby 80% of the assets are invested in the five countries that the team deems most attractive based on fundamental factors, ranging from the macro environment to valuations.
Within security selection, the fund manager looks for what he considers to be mispriced businesses with a competitive advantage. The result is a portfolio that’s positioned in the Morningstar value style box, which is consistent with the investment process. There’s a lot to like here and results in various market conditions have been strong so the fund holds a Morningstar Analyst Rating of Silver.
The BGF Global High Yield Bond fund has five named managers who are supported by 14 credit analysts in the US and 12 in Europe. This is backed up by impressive risk analytics to help navigate through markets. As a whole this team manages $45 billion in high yield, so to stay nimble they use up to 10% in equities when wanting to be aggressively positioned and 10% in corporate bonds when they want to be more defensive.
Derivatives are also used at the margin to quickly diversify market exposure. We feel they use these instruments effectively in an area where liquidity isn’t what it used to be. Although fees are higher than the category median, performance has outpaced 90% of rivals over the long term and we’ve reaffirmed a Morningstar Analyst Rating of Bronze.
The Standard Life UK Smaller Companies (SLS) investment trust holds the top Morningstar Analyst Rating of Gold. Our conviction here is underpinned by the manager Harry Nimmo, who’s shown great consistency and the ability to add value over his long tenure. His screening of stocks has strong elements of momentum, growth and quality factors. The fund is entirely bottom up and when looking at the portfolio as a whole, the market cap of underlying holdings is lower than that of the open ended version.
We believe this gives the closed-ended structure an edge in portfolio construction and honing in on best ideas. With exposure from AIM-listed companies through the FTSE 250, Nimmo brings substantial experience, and alongside the broader team, he draws effectively upon an established process. In our discussions, investors will be pleased to hear that retirement isn’t on Nimmo’s mind and he’s reiterated his commitment to the trust.
