Why Analysts Downgraded M&G Funds

Simon Dorricott explains why analysts downgraded the M&G Asian and M&G Global Emerging Markets funds

Simon Dorricott 5 July, 2018 | 7:06AM
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Simon Dorricott: Today I am going to discuss the recent changes to the Morningstar Analyst Ratings for the M&G Global Emerging Markets and M&G Asian funds.

The ratings for both of these have moved from Bronze to the current Neutral, following the announcement of the retirement of fund manager Matthew Vaight. By the end of the year the funds will have been passed to new managers, with Alastair Bruce taking over M&G Asian and Michael Bourke the GEM fund.

Both managers are part of the current team and intend to retain the existing investment philosophy – so the question is then why have we moved to Neutral ratings?

Well essentially our conviction in these funds has largely been founded on Vaight’s experience. He has been involved in managing them since 2008 and has been sole lead manager since 2012. In our view he clearly brings this experience to bear when constructing his portfolios and selecting stocks from team ideas.

Even operating within the same broad process, the new managers have scope to come to different conclusions and potentially produce very different outcomes for investors. Bourke has more experience than Bruce and has managed a multi-asset GEM income fund for M&G over the past year. He has seen some short-term success with that fund, but his decision-making there highlights differences in view compared to Vaight and serves to emphasise the previous point.

So in summary, while we expect the value and mid-cap biases of these funds to remain under the new managers, we need to see evidence of how they personally interpret and implement the investment approach before we have the conviction to award a positive rating.

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
M&G Asian GBP I Acc2,441.30 GBP-1.05Rating
M&G Global Emerging Markets GBP I Acc414.80 GBP-0.78Rating

About Author

Simon Dorricott  is a Senior Fund Analyst for Morningstar

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