Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: This week Morningstar analysts reveal upgrades for JPM and downgrades for Woodford and Invesco

Morningstar Analysts 11 June, 2019 | 10:05AM
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JPM US Equity Income – Gold

Thomas Lancereau

A long-tenured manager in Clare Hart and a sensible and proven process make JPMorgan US Equity Income one of the best of its kind. Hart is supported by two dedicated analysts, Andrew Brandon and Shilpee Raina, who have been at the firm for 19 and 14 years, respectively. Whilst the fund does not have the highest yield, its returns on both an absolute and risk-adjusted basis are very good. The strategy’s process lends itself to investing in high-quality companies that are able to sustain a stable dividend and are trading at reasonable valuations. This focus on quality has helped to keep the volatility of the portfolio relatively low. Our increasing conviction in this strategy earns it an upgrade to a Morningstar Analyst Rating of Gold, having previously been Silver.


LF Woodford Equity Income – Negative

Peter Brunt 

Following heightened levels of redemptions, the Authorised Corporate Director and Woodford Investment Management Limited (WIM) suspended dealing in this fund's shares on 2 June 2019. Our most recent report on the fund in May 2019 cited “Persistent redemptions, underperformance, and stock-specific issues, combined with the manager's relentless willingness to push the portfolio to its liquidity limit, have resulted in portfolio positioning that we consider extreme.” At that point, the fund held a Morningstar Analyst Rating of Neutral. By suspending dealing in shares in the fund, WIM has the time to significantly increase the liquidity profile of the portfolio without triggering a fire sale of illiquid assets. With portfolio positioning now focused more on sourcing liquidity than on investment conviction, we consider the strategy structurally impaired in its ability to implement its investment process. With this further development, we are lowering our Morningstar Analyst Rating to Negative from Neutral.

Invesco Euro Corporate Bond – Bronze

Evangelia Gkeka

Invesco Euro Corporate Bond strategy is comanaged by experienced portfolio managers Julien Eberhardt and Paul Read utilising a benchmark-agnostic approach. There are no formal limits other than a 30% cap on high-yield debt, government bonds, and cash altogether. The managers’ macroeconomic outlook guides the portfolio's positioning, though they are also pragmatic in identifying opportunities outside of the central top-down scenario. The strategy has positive aspects based on the team and its strengths in security selection and sector allocation but it has become less distinctive than that of other strategies managed by the team, given the recent more benchmark-aware duration positioning. This, alongside fees that are at the higher end of the peer group, have contributed to move its Morningstar Analyst Rating to Bronze from Silver.

Investec Cautious Managed – Neutral

Rajesh Yadav

While we appreciate the success manager Alastair Mundy has achieved in delivering strong returns over time in his UK-focused equity mandates, we have moved to a view that the team’s skills are less transferable in a multi-asset setting on the Investec Cautious Managed strategy. Also, within the context of an increasingly competitive landscape, the investment process no longer stands out as superior, particularly around the nonequity part of the portfolio. We are therefore lowering its Morningstar Analyst Rating to Neutral from 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
Invesco Euro Corporate Bond Z EUR Acc12.23 EUR0.40Rating
JPM US Equity Income C Net Acc4.56 GBP1.77Rating
LF Equity Income Z Sterling Acc0.98 GBP0.00
Ninety One Global Income Opports I Acc181.10 GBP0.34Rating

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