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Morningstar's Manager Check Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate Henderson Smaller Companies trust, JP Morgan Corporate Bond and Dodge & Cox Global Cox

Jonathan Miller 10 October, 2018 | 8:52AM

 

David Holder: Welcome to the Morningstar Manager Check-up for fund updates from our analyst team.

Henderson Smaller Companies Investment Trust (HSL) benefits from the management of the experienced Neil Hermon who has been manager here since November 2002 and has invested in UK smaller companies since 1993. The investment process is rigorous and established, initially the universe is screened for suitable liquidity and then four key measures; model, management, money and momentum, are applied to the remaining stocks.

Company meetings, broker input, together with a valuation and macro sanity check complete the process. We feel that the fund is a strong candidate for those investors seeking exposure to a broad range of UK smaller companies from those listed on AIM through to the FTSE 250. The team is stable, and the manager vastly experienced which leads to a consistent and effective process. Our conviction remains undiminished and we are pleased to reiterate our Morningstar Analyst rating to Silver.

The JP Morgan Global Corporate Bond fund benefits from a well-resourced team and is led by an experienced bench of five portfolio managers, whilst Lisa Coleman, JPMorgan's head of global credit, has been involved since the fund's inception in March 2009. The disciplined investment process exploits the full extent of resources available to the team, with the macro credit strategy, formulated by the wider fixed-income group shaping the portfolio's credit-risk stance and market tilt.

The managers then determine relative sector positioning and rely on a team of 20 analysts, dedicated to investment- grade credit research, for implementation of their top-down views. Duration closely matches that of its benchmark, while exposure to noninvestment- grade credit is limited to 10%, which is moderate compared with peers. The fund is competitively priced relative to peers, which provides a tailwind for investors. Our positive view here is maintained, and the fund retains its Morningstar Analyst Rating of Bronze.

The Dodge & Cox Global Stock benefits from a distinct investment approach, talented investment team, and low fees. The strategy is managed in a collegiate manner by the investment committee, whose members average 24 years with the firm, together with a well-resourced and experienced analyst team, which limits key-person risk.

The committee seek stocks that look cheap on a range of valuation measures. They then apply bottom-up, fundamental research and favour firms with good management, competitive advantages, and solid growth potential. The team will often take advantage of negative sentiment to initiate positions in fundamentally strong businesses and then hold for the long term.

It’s worth noting, however, that owing to the patient and contrarian style, the fund can lag at times, and as such, investors must be patient and willing to tolerate short-term underperformance. We reiterate the 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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Dodge & Cox Worldwide Global Stk USD Acc22.48 USD-0.26
Henderson Smaller Companies Ord970.00 GBP0.10
JPM Global Corp Bd A (mth) USD104.38 USD0.37

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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