Morningstar Fund Ratings: Weekly Round-up

Three Fidelity products feature among this week's list of rated funds to experience an upgrade or downgrade to their Morningstar Analyst Rating

Jeffrey Schumacher 1 October, 2019 | 8:42AM
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gold silver bronze


Fidelity Asian High Yield - Silver from Bronze

Patrick Ge

We have upgraded Fidelity Asian High Yield’s Morningstar Analyst Rating to Silver from Bronze. This is based on our increased conviction in portfolio manager Bryan Collins and the well-resourced analyst team. Additionally, this time-tested strategy, which holds the longest track record in the Asia high-yield Morningstar Category, has consistently delivered above peer median risk-adjusted returns in different market conditions. As such, we believe the strategy is a strong investment proposition within the Asia high-yield space, and it earns a Silver Morningstar Analyst Rating.

JPMorgan American Ord - Bronze from Netural

Jeffrey Schumacher 

After its strategy change in June 2019, JPMorgan American Ord benefits from seasoned managers, deep resources, and a decent process, which earn it a Morningstar Analyst Rating of Bronze. The fund amalgamates the highest convictions of the veteran duo of Jonathan Simon and Tim Parton, who run the strategy's value and growth sleeves, respectively. Eytan Shapiro runs a minor small-cap sleeve in the fund. All managers have multiple decades of experience in their respective specialties and rely on a large team of career analysts and significantly invest in the strategies they manage. The 20-40 stock portfolio displays their highest convictions. Despite that the allocation to the value and growth sleeves have been kept in a 60%-40% range, 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 can limit the strategy's attractiveness in our view. In addition, the fund has hardly invested in small caps, while those have also added value in the Advantage funds that Simon and Parton manage. 


Fidelity America - Netural from Bronze

Fidelity American Special Situations - Neutral from Bronze

Fatima Khizou

While manager Angel Agudo has been broadly consistent in his approach at the Fidelity American Special Situations strategy, issues with stock selection since 2016 have raised doubts about his ability to get the best out of the team and his interpretation of research. This, together with some uncertainty arising from recent changes made to the process, has lowered our conviction in the strategy's ability to consistently outperform in the long term. The Morningstar Analyst Rating is therefore lowered to Neutral from Bronze. 

JOHCM Asia ex-Japan - Bronze from Silver

Andrew Daniels 

JOHCM Asia ex-Japan still has a solid lead manager at the helm, but lower conviction in the investment approach drive its Morningstar Analyst Rating down to Bronze from Silver. Singapore-based Samir Mehta has led this vehicle since its September 2011 inception. He is an experienced investor who invests heavily in the strategy, and his insights are typically impressive, all of which bode well for the strategy’s future. Mehta blends bottom-up and top-down analyses to build this 40-stock portfolio. From a bottom-up perspective, he focuses on finding core quality-growth firms, which tend to be held for several years and make up the supermajority of portfolio assets. Mehta compliments the core ideas with cyclical ideas, which are short-term bets by nature and rely on his macroeconomic views. Owing to the team’s limited personnel resources, Mehta relies heavily on sell-side research and focuses his fundamental research efforts on the core ideas. Notably, Mehta doesn’t do much fundamental research on the cyclicals names, but instead picks stocks within this sleeve that have low price/book ratios. While the approach is reasonable, the lack of due diligence on the cyclicals names exposes the strategy to stock-specific risks that could be at least partially mitigated by more rigorous research. Despite the lower conviction, Mehta remains a talented manager and he continues to underpin our conviction in the strategy

New Ratings

T. Rowe Price US Large Cap Growth Equity - Silver

Mathieu Caquineau

T. Rowe Price US Large Cap Growth Equity (Oeic) has been assigned a Morningstar Analyst Rating of Silver, in line with the US mutual fund's and the Sicav’s ratings; both have been in existence for longer. Manager Taymour Tamaddon’s tenure dates to only January 2017, but he has settled in well at his first diversified charge. Tamaddon previously built a convincing track record on US-sold T. Rowe Price Health Sciences when its star manager and two analysts unexpectedly left. He posted strong results from 201316 as that team was rebuilt. Here, he got up to speed quickly in areas outside his healthcare expertise. He has demonstrated a thoughtful, well-executed approach that draws on the depth of T. Rowe Price’s analyst team, as evidenced by a good security selection across a range of sectors

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

Jeffrey Schumacher  is a Fund Analyst with Morningstar Benelux.

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