Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: This week Morningstar analysts reveal upgrades for Aberdeen and M&G, and downgrades for GAM, Threadneedle and Jupiter

Morningstar Analysts 16 April, 2019 | 1:18PM
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Aberdeen Japan Equity – Bronze

AS SICAV I Japanese Equity - Bronze

Aberdeen Japan Ord (AJIT) – Bronze

Jan Nel

Aberdeen Japan Equity’s capable management team and robust investment approach outweigh some uncertainties stemming from the 2017 merger of Aberdeen and Standard Life. As a result, the strategy’s Morningstar Analyst Rating has been upgraded to Bronze from Neutral. The strategy is managed by Aberdeen Standard’s Japan team, which has been led by the impressive Kwok Chern-Yeh since 2011. In meetings over the years, Kwok has been providing solid insights into portfolio holdings and how they tie back to the strategy’s quality investment philosophy. The strategy follows Aberdeen’s patient, bottom- up approach focused on quality and value, and we like that the team has stuck with the strategy’s quality knitting even during challenging periods. Despite a poor showing in 2018, the strategy is a worthy option for Japanese equity exposure because of its strong team and consistent approach.

M&G (Lux) European Strategic Value – Silver

Mathieu Caquineau

We have increased our conviction in M&G (Lux) European Strategic Value. This disciplined value strategy has been led by an experienced fund manager, Richard Halle, since its inception in 2008. Halle has proved his stock-picking skills across the market-cap ladder and in various sectors. Under his tenure, the strategy has regularly outperformed its Morningstar Category average and the MSCI Europe Value Index with a good handle on risk. The strategy’s Morningstar Analyst Rating is upgraded to Silver from Bronze.


Jupiter Distribution and Growth – Neutral

Rajesh Yadav

While we appreciate that the strategy’s higher relative U.K. bias has affected returns disproportionately following the Brexit vote in June 2016, stock selection has continued to deteriorate. Near-term success hinges on a favourable Brexit outcome, but on a long-term view the strategy also looks to manage downside volatility. Given there is little room for the fixed-income sleeve to act as a ballast (as it has done in the sister Distribution strategy) our conviction in the investment process has diminished which is reflected in a Morningstar Analyst Rating of Neutral, having previously been rated Bronze.

GAM Star China Equity – Neutral

Germaine Share

We have downgraded GAM Star China Equity’s Morningstar Analyst Rating to Neutral from Silver following the departure of experienced and long-tenured portfolio manager Michael Lai, who was our main source of confidence for the strategy. He will be replaced by Rob Mumford, who joined the firm in December 2018. Mumford brings 25 years of investment experience, most of it is from managing Asian long/short strategies without a public track record available.

The analyst team has also been shrinking over the past couple of years, and only two China-dedicated analysts remain. Mumford can leverage three other global emerging markets members, but this is nonetheless a small team. Mumford will continue to use a style-agnostic investment approach which combines bottom-up stock selection and top-down analysis. Unlike Lai, he intends to leverage the broader team for macro insights and introduce a greater benchmark-awareness to the strategy. While these tweaks seem sensible, we believe Lai was key to the successful implementation of the investment process, and we are not sure how it would fare under a new manager. Overall, the strategy is seeing meaningful changes on multiple fronts, which has significantly weakened our conviction in it.

Threadneedle (Lux) UK Equities ZG – Neutral

Fatima Khizou

While we continue to have a positive view on the manager and resources available, the fee on the fund’s clean share class relative to those on other UK equity funds is increasingly less competitive, giving it a greater hurdle to overcome. As a result, the fund’s Morningstar Analyst Rating is downgraded to Neutral from Bronze, reflecting our lower level of conviction in the fund's ability to outperform over the long term.



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
abrdn Japanese Equity I Acc299.52 GBP0.79Rating
abrdn Japanese Sust Eq X Acc JPY34.96 JPY0.61Rating
GAM Star China Equity Ord GBP Acc1.15 GBP1.62Rating
Jupiter Mer Inc&GthSel I Inc112.92 GBP-0.72Rating
M&G (Lux) Eurp Strat Val CI EUR Acc15.28 EUR-1.89Rating
Threadneedle (Lux) UK Eqs ZG GBP Acc31.21 GBP-1.01Rating

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