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Morningstar's Manager Check-Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate funds by Veritas, Baillie Gifford and Neuberger Berman

Jonathan Miller 29 May, 2019 | 9:27AM

 

 

Jonathan Miller: Welcome to the Morningstar Manager Check-Up for three fund updates from our research team.

We start with Veritas Asian, which has been managed by Ezra Sun since inception, and he’s got more than 20 years of Asian equities experience. He’s then supported by three analysts. The fund combines a thematic approach with bottom-up stock selection. Sun looks to invest in quality companies that have material free cash flow and high barriers to entry. From there, he identifies what he deems as long-term winners that are benefiting from strategic themes. What we see is a three-to five-year holding period and a fairly concentrated portfolio of 35-50 stocks. We have high regard for Ezra Sun and this distinctive approach which has demonstrated long-term success, so the fund holds a Morningstar Analyst Rating of Silver.

The Baillie Gifford High Yield Bond fund has seen some people turnover in the last 18 months, but Robert Baltzer, the head of high yield, remains in place. This has resulted in some more junior people quickly rising through the ranks. The strategy itself is bottom-up focused, with close attention on the sustainability of an issuer’s competitive position and capital structure. The process results in a fairly concentrated portfolio of 50-90 issuers, which highlights the dependence on in-depth fundamental research. Despite the changes here, fees are very attractive, meaning the fund has a large competitive advantage versus peers in the sector. This helps gives us confidence over a full market cycle meaning we retain the Morningstar Analyst Rating of Bronze.

Finally, the Neuberger Berman Emerging Market Debt Hard Currency fund has a trio of managers at the helm who’ve worked together since 2000. The team around them has also largely stayed together so it’s of good size and composition. The starting point for the process is a monthly top-down evaluation based on various inputs. From there the focus is on bottom-up selection. Duration positioning and allocation to corporates play secondary roles. We’ve found this to be a strong process that’s been executed well. When you add in the experienced team and above average track record, the fund keeps its 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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Baillie Gifford High Yield Bond B Acc253.30 GBP0.04
Neuberger Berman EM DbtHrdCcy USD I Acc14.14 USD-0.21
Veritas Asian Retail GBP507.62 GBP-0.39

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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