Morningstar's Manager Check Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate JPM Natural Resources, Franklin US Opportunities and Polar Capital Global Insurance

Fatima Khizou 13 June, 2018 | 7:17AM
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Fatima Khizou: Welcome to the Morningstar Manager Check-up for the latest updates from our fund research team.

JPM Natural Resources has been run by Neil Gregson since 2012. Gregson is an experienced resources investor with industry background and he is supported by a broad bench of commodity specialists. The manager targets mis-valued resources producers – from preproduction stage to reserve definition – with the potential for strong growth.

Stocks are primarily identified through a bottom-up investment approach. The resulting portfolio is diversified across mining and energy, with a strong bias to smaller-caps. This bias and higher beta have seen the fund lose far more than its typical peer during challenging periods for commodities; however, these same features combined with solid stock picking play in its favours in more positive environments as evidenced by its strong showing in 2016-17.

Overall, the strategy has performed as expected. We think this is a worthy option for investors who understand its features and are prepared to ride its volatility and the fund retains its Morningstar Analyst Rating of Bronze.

Grant Bowers Began his tenure on Franklin US Opportunities in 2007 and has more than 20 years of investment experience. Bowers is backed by deputy manager Sara Araghi and the group’s deep bench of over 40 equity analysts. The manager looks for firms that will generate sustainable long-term earnings growth, emphasising those with solid balance sheets, barriers to entry, and strong management. This is an all-cap approach with smaller companies’ exposure varying depending on opportunities.

The manager’s focus on growth is evident in the portfolio’s price multiples which have tended to be higher than the benchmark and peers but also in its sector bets which can be substantial. The strategy tends to post solid results when growth stocks are in favoured and has overall produced a solid outcome against peers. We continue to see several positive attributes here including an experienced manager and a consistent approach, and the fund maintains its Morningstar Analyst Rating of Bronze.

The Polar Capital Global Insurance fund is managed Nick Martin who is an experienced insurance investor and whose involvement with the strategy started in 2001. The team follows a disciplined bottom-up approach combined with industry knowledge to build a concentrated portfolio of insurance stocks, with a bias to mid-caps.

The team believes that the long-term attractiveness of insurance companies is highly dependent upon the discipline of management teams in writing business when rates are profitable and the ability to deliver sustainable growth in book value and underwriting profits over time. When management buy they hold on for the long-haul, so the turnover is very low.

The fund’s focus on quality came to the fore in 2008 and again in 2011 and its overall approach has delivered excellent long-term results. The team’s expertise and consistent approach continue to inspire confidence that it can continue to deliver, and the fund’s Morningstar Analyst Rating of Silver is reaffirmed.

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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About Author

Fatima Khizou  is an Investment Research Analyst for Morningstar