Morningstar Fund Ratings: Weekly Round-Up

A busy week for fund ratings sees Morningstar analysts initiate coverage on two funds while BlackRock UK Special Situations is downgraded to Neutral 

Francesco Paganelli 6 August, 2019 | 9:48AM
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analyst rating

New Ratings

Fulcrum Diversified Absolute Return - Neutral 

Francesco Paganelli

We have initiated coverage of Fulcrum Diversified Absolute Return and Fulcrum Diversified Core Absolute Return funds with a Morningstar Analyst Rating of Neutral. The strategy is run by seasoned managers with strong expertise in the macro space, but team instability, a complex process that in our view is difficult to execute successfully given the mandate and resources available, and a disappointing track record limit our overall conviction at this point.

Impax Global Equity Opportunities - Bronze

Ronald Van Genderen

We initiate coverage on Impax Global Equity Opportunities with a Morningstar Analyst Rating of Bronze. The strategy is co-managed by two experienced managers, Kirsteen Morrison and David Winborne, who are supported by an extensive team of experienced analysts. However, the experience of the two co-managers mainly relates to Asian equities; for the broader team, the experience is to a great extent related to the more specific thematic and environmental market strategies of Impax, which in general have a strong focus on mid- and small caps.

Overall, we highly value the stability and resources available within the team but acknowledge that the team is less seasoned in global large-cap equities. In our opinion, the applied process can give the strategy an edge; it largely uses the same process as other Impax listed equity offerings, which we especially know well from Bronze-rated Impax Environmental Markets. It is well-structured, disciplined, and primarily based on bottom-up stockpicking.

The approach targets companies possessing sustainable competitive advantages that can profit from a transition to a more sustainable economy. Although the track record is still relatively short and has been inconsistent, the strategy has outperformed the global large-cap growth equity Morningstar Category average, its MSCI ACWI benchmark, and the stylistically more relevant MSCI ACWI Growth Index.


PineBridge Global Dynamic Asset Allocation - Silver from Bronze

Barbara Claus

We have upgraded PineBridge Global Dynamic Asset Allocation’s Morningstar Analyst Rating to Silver from Bronze, as we think it is a strong choice for multi-asset investors. The strategy is managed with a robust three-step process that allows qualitative inputs to be implemented consistently in a rules-based manner. The multi-asset team is 21-strong, with senior members being very experienced and the team exhibiting minimal turnover and strong collaboration between areas. It also benefits from the firm's broader equity, fixed income, currency, and private asset businesses. Below-average fees of the fund’s I share class are an additional positive here.


BlackRock UK Special Situations - Neutral from Bronze

Fatima Khizou

Luke Chappell, who had co-managed this all-cap strategy since September 2015 alongside Roland Arnold, relinquished his portfolio management responsibilities in June 2019. Arnold, who has a longer association with this strategy, having worked first as an analyst, then co-manager, under former lead manager Richard Plackett, remains in place and was appointed sole manager by the group. While the overall investment approach remains unchanged, there is uncertainty around its implementation by Arnold, whose expertise and portfolio management experience are predominately in the small-cap arena of the market. When combined with constant turnover within the UK equity team, our overall conviction in the strategy has diminished. We have therefore lowered the strategy’s Morningstar Analyst Rating to Neutral.

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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About Author

Francesco Paganelli  is a Fund Analyst for Morningstar in Italy