Fund in Focus: Guinness Global Energy

Morningstar analyst Fatima Khizou explains why the team have downgraded the Guinness Global Energy fund

Fatima Khizou 13 April, 2018 | 9:45AM
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Fatima Khizou: I’m here today to talk about the Morningstar Analyst Rating change to the Guinness Global Energy fund which was downgraded to a Neutral Rating.

We constantly review and assess the merits of our rated universe and a highly rated fund should continue to impress relative to its competitors and add value for its investors. In this instance our conviction in the team and investment approach have considerably diminished.

More specifically, we feel that the fund’s approach which leads to a concentrated benchmark-agnostic, and highly volatile portfolio with a greater emphasis on valuation than quality has delivered a disappointing outcome for this fund’s holders since the 2009 and 2010 periods during which most of the alpha was generated. Stock picking has particularly been poor across all major energy segments and over different periods. Given the nature of the energy sector, the top down element here is also key and our level of conviction in the duo at the helm to add value through the implementation of the top-down views has also lessened.

These factors combined with high expenses have led us to change the rating on this offering as we do not believe it can outperform the comparative index and peers.

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
Guinness Global Energy Y USD Dist6.50 USD-1.33Rating

About Author

Fatima Khizou  is an Investment Research Analyst for Morningstar