Morningstar Fund Ratings: Weekly Round-up

Our analysts round-up the upgrades and downgrades to Morningstar Analyst Rated funds from the past week 

Patrick Ge 22 October, 2019 | 10:13AM
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New Ratings

Pimco GIS StocksPLUS - Silver

Samiya Jmili

We have initiated coverage on PIMCO GIS StocksPLUS with a Morningstar Analyst Rating of Silver. This version is a sibling to the US-domiciled PIMCO StocksPLUS. It is a unique offering amongst US large-cap blend peers, including enhanced funds. It combines the performance of the S&P 500 with the returns of a short-term bond portfolio run by seasoned portfolio manager Mohsen Fahmi. He is supported by two comanagers (Jing Yang and Bryan Tsu) and PIMCO’s extensive and well-resourced global analyst team. Although this setup only dates back to July 2018 (when Sudi Mariappa stepped off from his lead portfolio manager role), Mohsen’s prior involvement with the strategy, the fund’s special and sensibly driven process, and the rebate-free share class’ reasonable price tag have bolstered our conviction on this strategy.   


BGF US Dollar High Yield - Silver from Bronze

Patrick Ge

We have upgraded BGF US Dollar High Yield Bond’s Morningstar Analyst Rating to Silver from Bronze. The strategy is a mirror of its Gold-rated BlackRock High Yield US-domiciled sibling, though with one key difference – the absence of loans in its portfolio. The strategy benefits from the same seasoned group of managers – Jimmy Keenan, David Delbos, and Mitch Garfin – who have worked together for more than a decade. Flexible at its core, the fund has been steered by its managers through changing market environments and with impressively strong peer-relative returns. As such, this high-yield bond strategy is among the strongest options in its category. 


Pictet Asian Local Currency Debt - Neutral from Bronze

Patrick Ge

We have downgraded Pictet-Asian Local Currency Debt I USD’s Morningstar Analyst Rating to Neutral from Bronze. Wee-Ming Ting, who has comanaged this strategy alongside Philippe Petit since July 2007, unexpectedly retired in December 2018. While the investment process remains intact, its unique dependence on its portfolio managers would be affected by Ting’s departure. With no plans to replace him, Singapore-based Petit and Carrie Liaw – who was named a comanager in May 2018 – will be responsible for managing the portfolio going forward. As such, we need time to assess whether the strategy’s prior success can be replicated with the duo onwards. 

Templeton Emerging Markets Bond - Neutral from Bronze

Patrick Ge

We have downgraded Templeton Emerging Markets Bond’s Morningstar Analyst Rating to Neutral from Bronze. While it is helmed by a team of seasoned managers led by the well-regarded Michael Hasenstab, we believe the strategy's benchmark-agnostic and contrarian investment approach is less effective when applied to a narrower investment universe compared with the team’s global bond offerings. Specifically, the smaller investment universe has led to concentrated risk exposures, which has accentuated losses when missteps occur. This, together with the high fees, has led to a mixed track record over the long term. Overall, we believe Templeton’s global bond offerings provide a better way to harness the strengths of the investment team and process

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

Patrick Ge  is an Analyst on the Morningstar Manager Research team