Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: Eight funds have their ratings downgraded this week, including two Jupiter funds and the H2O Allegro fund. 

Francesco Paganelli 3 July, 2019 | 9:55AM

bronze

Upgrades

BSF Global Long/Short Equity - Silver from Bronze

Francesco Paganelli 

We have upgraded our Morningstar Analyst Rating for BSF Global Long/Short Equity to Silver from Bronze. The strategy’s veteran team, superior resources, and forward-thinking approach continue to help the fund stay ahead of peers. Our conviction in this experienced and well-resourced team has increased, earning the fund an upgrade to a Morningstar Analyst Rating of Silver. 

Downgrades

Alken Small Cap Europe - Bronze from Silver

Mathieu Caquineau 

We have reduced Alken Small Cap Europe’s Morningstar Analyst Rating to Bronze from Silver to reflect our lower level of conviction. One of the three co-managers, Raif Abillama, was asked to step down in May 2019 and returned to an analyst role with the team. He was promoted in 2017. While decision-making had remained a joint effort with the fund’s longtime managers, Nicolas Walewski and Marc Festa, Abillama was primarily in charge of generating investment ideas with the help of the research team. This has not worked as well as expected. Beyond our concerns related to idea-generation in the small-cap space, we note that Walewski and Festa’s workload has increased with the strategy now fully back in their hands and no immediate plan to replace Abillama. The fund’s high fees remain a major drawback. The strategy still has merits, however. The fund managers and the team around them are experienced and they have used this high-conviction approach to good effects over the long term.   

H20 Allegro - Neutral from Bronze

Mara Dobrescu 

H2O Allegro is run by an experienced team adept at making top-down calls on government bonds and currencies. But this team’s decision to invest a sleeve of Allegro’s portfolio in illiquid, high-risk corporate bonds, all linked to German entrepreneur Lars Windhorst, raises concerns about the robustness of the security-selection process applied here. This adds to our pre-existing concerns on the effectiveness of this fund’s risk controls, resulting in downgrading the Morningstar Analyst Rating to Neutral from Bronze. Morningstar previously reported that the fund had cut its bond exposure following the exit of the firm's chief executive.  

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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.

About Author

Francesco Paganelli  is a Fund Analyst for Morningstar in Italy

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