Morningstar's Manager Check Up

REAFFIRMED RATINGS: Why analysts positively rate funds by Neuberger Berman, Polar Capital and Loomis Sayles

Jonathan Miller 16 May, 2018 | 11:20AM
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Jonathan Miller: Welcome to the latest Morningstar manager check up for fund updates from our analyst team.

The Neuberger Berman High Yield Bond fund is led by four managers, each of which has more than 25 years industry experience. Ann Benjamin, who was head of the team, retired in 2015 but the managers had worked with her for a long time, and maintained continuity of the investment process. We see this process as being thorough and extensive, with a best practice checklist, which ensures all bonds are evaluated on the same set of criteria. On the top down side, global economic trends, credit attractiveness, and analysis of individual industries are all taken into account. The fund’s returns and risk adjusted performance have been middle of the pack over the last three and five years. But with its emphasis on downside protection, experienced team and thoroughness of credit analysis, the fund maintains its Morningstar Analyst Rating of Silver.

Andrew Holliman, who’s lead manager of Polar Capital North American, has run US equity portfolios for more than 15 years. He’s supported by co-manager Richard Wilson and they’ve worked together for ten years. They look to invest in companies that are able to provide high, or improving, free cash flow generation over the longer term. This gives scope to invest in sustainable growth stocks and companies going through a more cyclical recovery. There’s been a mid cap bias since inception and exposure here is currently double that of the peer group. The largest sector overweight is in financials, while technology is a slight underweight. The track record since launch in 2011 has seen outperformance compared with the category and the fund’s index. We see this as a core offering for US exposure and the fund maintains its Morningstar Analyst Rating of Bronze.

The management team of the Loomis Sayles Multisector Income fund is led by the renowned Dan Fuss who has three co-managers alongside him. There’s a degree of flexibility here, as the bulk of the portfolio is in investment grade bonds, but up to 35% can be in high yield and a 10% maximum in equities. While bottom-up credit research plays a significant role, so do views on broad economic trends. The team are willing to stick their necks out and be contrarian, showing a keen eye for value. This has seen them pick up peripheral European bonds after sharp losses and adding to energy names when the sector got hit a few years ago. This does tend to mean a volatile performance pattern and as one of the most aggressive funds in its category it can require considerable patience. But a seasoned team, disciplined strategy, and solid long-term returns, support its Morningstar Analyst Rating of Gold.

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
Loomis Sayles Multisector Inc R/D USD12.52 USD-0.15Rating
Neuberger Berman HY Bd GBP A Acc14.60 GBP0.07
Polar Capital North American I35.47 USD-0.19Rating

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK