Morningstar Fund Ratings: Weekly Round-up

This week sees new ratings for JPM and M&G funds and a downgrade for MFS Meridian

Louise Babin 10 September, 2019 | 11:00AM
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Morningstar ratings

New Ratings

JPM America Equity - Bronze

We have initiated coverage on JPM America Equity with a Morningstar Analyst Rating of Bronze. The fund benefits from seasoned managers, deep resources, and a decent process. JPM America Equity amalgamises the highest convictions of the veteran duo Jonathan Simon and Tim Parton, who run their own value and growth sleeves in the strategy, respectively. Simon selects the highest convictions from his US-domiciled Silver-rated JPMorgan Value Advantage fund, while Parton sources ideas from his Bronze-rated US-domiciled JPMorgan Growth Advantage fund. Both managers rely on a large team of career analysts and significantly invest in the strategies they manage. A decent process is in place to construct a 20- to 40-stock portfolio that displays their highest convictions.

Despite that, the allocation to the value and growth sleeves have been kept in a 60%-40% range, and the strategy’s historical portfolios have consistently resided in the growth column of the Morningstar Style Box. We would have expected a more balanced profile from such an approach, and this limit the strategy’s attractiveness in our view. In addition, the fund has hardly invested in small caps, while those have added value in the Advantage funds that Simon and Parton manage. The strategy’s track record versus the US Large-Cap Growth Morningstar Category is solid, but the fund trails the Russell 1000 Growth Index.

M&G (Lux) Global Macro Bond - Silver

Louise Babin

We have initiated coverage on M&G (Lux) Global Macro Bond with a Morningstar Analyst Rating of Silver. This version is a sibling to the longer-standing UK OEIC, where Jim Leaviss, a well-resourced analyst team, and a time-tested process are all aspects that lead to our positive view. Although we criticise the fund's high ongoing charges, given Leaviss' deep and diverse experience, his ability to integrate the team's best ideas, and his consistent track record employing this eclectic and flexible approach, we believe the strategy can continue to do well.


MFS Meridian US Value - Silver

Natalia Wolfstetter

The upcoming departure of veteran manager Steven Gorham is a meaningful loss for MFS Meridian US Value, but the strategy still has several strengths. Gorham has steered this strategy to an excellent record since 2002, but he plans to step down on December 31 2020 to focus on other MFS offerings. He'll leave the strategy in capable hands, but the team won't be quite as solid. Comanager Nevin Chitkara will stay put, and Katherine Cannan will join as a comanager on December 31 2019. Cannan has limited experience and no record running money, but there are reasons to believe in her ability to step in here. According to MFS, she has done well recommending stocks for the firm’s various strategies, including this one, since joining as an analyst in 2013. She will also have time to learn the ropes, as Gorham will remain on the strategy through 2020. The strategy's proven approach which has helped the strategy outperform the Russell 1000 Value Index during Chitkara's tenure with a bit less volatility will remain in place.


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.