Morningstar's Manager Check Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate Baring Europe Select First State Global Listed Infrastructure and Lindsell Train Japanese Equity

Jonathan Miller 19 September, 2018 | 10:36AM
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Jonathan Miller: Welcome to the Morningstar manager check up for the latest updates from our fund research team.

Baring Europe Select has had Nick Williams at the helm since 2004 and he has over two decades’ experience in European equities. This is a small cap fund and Williams targets companies with unrecognised growth opportunities, preferring ones that are high quality and well-run. This is then complemented by valuation metrics to help him set price targets.

There’s also strict criteria on trimming and reducing positions. After a stock rises 40%, its exposure is scaled back to its purchase level. The sell discipline sees a stock reviewed if it falls 10% from its purchase price, and a 20% fall typically results in a sale. Williams has executed his process well over the years and we believe a number of positives are in place here, giving us strong conviction this fund will outperform its peers in the long run, meaning it holds a Morningstar Analyst Rating of Silver.

Lead manager Peter Meany has run the First State Global Listed Infrastructure fund since inception in 2007. He’s ably supported by comanager Andrew Greenup, both of whom are highly experienced, and their strong partnership encourages thorough research in the 10-person team. What you get here is exposure to the appealing characteristics of listed infrastructure: stable, defensive, and inflation-protected cash flows and capital growth opportunities.

The process favours companies with quality assets, trading at a discount to intrinsic value. We’ve seen some contrarian moves into emerging markets as well as out-of-favour energy pipeline companies, which shows there’s also a sense of being opportunistic. We believe the seasoned management team has a consistent approach and the fund retains a Morningstar Analyst Rating of Bronze.

Michael Lindsell has managed the Lindsell Train Japanese Equity fund since 2004 and he first started covering this space in 1985. The crux of the investment philosophy lies in the belief that a highly concentrated portfolio of high-quality, cash-generative, strong, and easily understood business franchises will outperform the market and reduce volatility over the long term.

With a portfolio of 20-30 best ideas across the market cap spectrum, investments are based solely on fundamental conviction. This also means the approach leads to sizable active positioning relative to the Topix index, which has worked well over the long term. The fund has far lower volatility than both the market and peers, has a smaller maximum drawdown, and has very rarely dropped below the category average on a rolling five-year basis. We continue to like the manager's clear investment philosophy and his disciplined and consistent approach, so we’ve reaffirmed the fund’s Morningstar Analyst Rating of Silver.

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
Barings Europe Select I GBP Inc4,512.92 GBP-2.86Rating
First Sentier Glb Lstd Infra III USD Acc21.35 USD0.47Rating
Lindsell Train Japanese Eq B Yen Acc240.59 JPY1.04Rating

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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