Morningstar Fund Ratings: Weekly Round-up

A new rating for an M&G bond fund and a downgrade for a Robeco China equity fund

Louise Babin 6 September, 2019 | 9:22AM
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New Ratings

M&G (Lux) Floating Rate High Yield – Bronze

Louise Babin

We initiate coverage on this M&G fund with a Morningstar Analyst Rating of Bronze. This was launched as part of M&G moving non-sterling share classes into Luxembourg vehicles to protect non-UK investors in case of Brexit. This version is a sibling of the longer-standing UK version, where James Tomlins leverages the well-resourced fixed-income team at M&G to deliver global high yield bond exposure with negligible interest-rate duration. Performance of both funds in base currency should closely match each other, meaning that we’re confident on continued execution of the investment approach in the SICAV.  


Robeco Chinese Equities – From Silver to Bronze

Andrew Daniels 

Lower conviction in Robeco Chinese Equities’ investment approach leads to a downgrade in its Morningstar Analyst Rating to Bronze from Silver. The strategy has been managed by Victoria Mio, CIO of Chinese equities, since May 2007. She has strong support from backup manager Liying Du, who joined Robeco in 2013. Mio brings a level of experience and stability not often seen in this space, while Du has shown impressive insights in meetings. Recent developments with the investment approach have prompted questions over its rigor and consistency. For instance, Mio briefly increased the exposure to materials, financials, and utilities - and reduced consumer discretionary - amid the late 2018 bearish market conditions.

As a result, the portfolio’s style exposure shifted towards value from growth by December 2018, as evidenced by the Morningstar Style Box. Rationale for the sudden shift was weak, and although the portfolio has since rotated back to growth in 2019, it was a short-sighted move and demonstrated a lack of commitment to the approach during adverse times. Adding another layer of uncertainty is a move to make the portfolio more concentrated, which may make it more volatile. That said, the strategy has been a strong long-term performer, and it continues to benefit from a solid team and modest expenses, making it a worthy option for Chinese equity exposure

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

Louise Babin  is a senior analyst for Morningstar.