Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: This week, fund analysts reveal a new rating for Lxyor, and upgrades for Artemis and XTrackers funds

Morningstar Analysts 18 December, 2017 | 8:01AM
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New Ratings

Lyxor MSCI India ETF C-EUR – Negative

Monika Dutt

We believe that the fund will continue underperforming its category peers over the long term. The ETF tracks the MSCI India, a market-cap weighted index that includes approximately 80 stocks and represents 85% of the Indian equity market. The index is broadly diversified at the sector and stock level, but highly concentrated in large-caps. By moving further down the cap spectrum and screening for higher-quality stocks, active managers in the Morningstar India Equity category have been able to add value over the MSCI India benchmark. The ETF’s risk-adjusted returns ranked in the bottom quartile on a 3-, 5- and 10-year basis relative to surviving active and passive funds in the India equity category. With an ongoing charge of 0.85%, the Lyxor MSCI India is also the most expensive ETF in the category.

Upgrades

Artemis European Opportunities – Silver

Samuel Meakin

Co-managers Mark Page and Laurent Millet have forged a solid dynamic over time, with each brining complementary skills to the table; their partnership underpins our conviction here. The investment process is similar to that which Page employed with success at LV= Asset Management prior to joining Artemis and, in our opinion, it is robust and repeatable. Furthermore, the managers have demonstrated consistency in its application, both in market conditions that are well-suited to the approach and in those that are less favourable. Evidence of this consistency, coupled with the managers’ strong stock-level analysis and thoughtful consideration of the wider market environment, has served to increase our conviction in this offering.

Xtrackers II Eurozone Government Bond ETF (DR) 1C – Gold

Jose Garcia-Zarate

We have upgraded the Analyst Rating for this Xtrackers ETF from Silver to Gold. The Eurozone government bond market is highly liquid and opportunities to add value over a standard benchmark have been severely curtailed. An all-issuer, all-maturity and low-cost index-tracking approach has become the default investment option. Risk-adjusted returns for passive funds in this Morningstar category have consistently ranked in the first quartile over short and multi-year periods. From inception until September 2016 the ETF employed synthetic replication and the management was outsourced. It now follows physical replication and the management is done in-house by Deutsche Asset Management. We are satisfied that the transition has been smooth and has not had any impact on the ETF’s tracking ability. For this reason, the fund is now deserving of our highest accolade.

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
Artemis European Sustainable Gr I Acc1.60 GBP0.32Rating
Lyxor MSCI India ETF Acc EUR29.93 EUR-0.12Rating
Xtrackers II Euroz Govt Bd ETF 1C EUR EUR211.73 EUR-0.60Rating

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