Morningstar's Manager Check Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate Invesco Monthly Income Plus, Kames Sterling Corporate Bond and Jupiter European

Samuel Meakin 27 June, 2018 | 8:33AM
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Samuel Meakin: Welcome to the Morningstar Manager Check-up for recent fund updates from our research team.

Invesco Perpetual Monthly Income Plus is managed by Paul Causer and Paul Reed – they’re responsible for the fund’s fixed income investments and the overall allocation between bonds and equities. There’s an upper limit of 20% to equities, and stock selection for this sleeve of the portfolio is done by the experienced UK equities investor Ciaran Mallon. Causer and Read have worked together at Invesco Perpetual since 1995 and are two of the most experienced fixed income managers in the industry.

They invest across the fixed income spectrum, and their top-down macro views help to drive the broad allocations within the fund. Although medium-term performance has lagged due to their cautious interest rate positioning, we continue to like the experience of the managers and the high level of conviction they show, which has served investors well over the long term, and the fund retains its Morningstar Analyst Rating of Silver.

Kames Sterling Corporate Bond fund has been managed by Iain Buckle since October 2009. David Roberts was also a named manager on the fund before leaving the group in August last year. We did view his departure as a loss, but we believe that the fund continues to benefit from the input of a well-resourced team at Kames as well as Iain Buckle’s extensive experience. He’s now supported by Rory Sandilands as co-manager, who joined Kames in 2016.

The investment process here combines top-down views with bottom-up security selection, and in addition to the core of the portfolio, which is made up of investment-grade bonds, the fund may hold up to 10% in high-yield bonds and up to 20% in government bonds.

The entire Kames fixed income team meets monthly to discuss and formulate the firm-wide macro views, and the co-managers here decide how to implement those views within the constraints of this fund’s mandate. Despite short-term challenges to performance due to the underweight duration stance, the long-term track record remains strong and the fund continues to hold a Morningstar Analyst Rating of Silver.

The Jupiter European fund has been managed by Alexander Darwall since 2001, and this long tenure has provided investors with a high degree of stability and consistency of investment approach. Darwall takes a high-conviction, unconstrained approach to allow him to seek out the best opportunities across Europe.

He aims to invest in companies that can sustain profit growth and margins over a long period, and the portfolio has had a consistent and significant growth and quality style bias. Regular direct contact with company management teams is a key facet of the process here.

There’s no set time horizon when buying a stock, and Darwall is happy to continue to hold on to successful investments as long as the strong business and management fundamentals remain in place; this means that portfolio turnover is generally quite low. The consistent, high-conviction approach has delivered very strongly for investors over the long term, and the fund retains 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
Aegon Sterling Corporate Bond GBP B Acc87.70 GBP-0.19Rating
Invesco Monthly Inc Plus UK Z Inc196.49 GBP-0.10Rating
Jupiter European I Acc3,678.41 GBP-0.99Rating

About Author

Samuel Meakin  is a fund analyst for Morningstar

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