3 Rated Funds Run by Women

International Women's Day: Morningstar analyst Fatima Khizou looks at three highly rated female-run funds 

Holly Black 4 March, 2020 | 10:15AM
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Holly Black: Welcome to the Morningstar Manager Check-up. I'm Holly Black. With me is Fatima Khizou, she is an analyst on the Morningstar Manager Research team. Hello.

Fatima Khizou: Hi, Holly.

Black: So, we've got International Women's Day coming up this weekend. So, I thought great opportunity to look at three funds that are rated and run by women. Where should we start?

Khizou: So, the first one is JPM US Equity Income which holds a Morningstar analyst rating of Gold and run by Clare Hart. So, Hart is an experienced manager. She has been running this strategy for over 15 years and she's a passionate investor. She practices a long-term approach and distinctive investing to income. She looks for high-quality companies that are able to sustain stable dividend and are trading at reasonable price. So, that focus on quality is visible, for example, across the long-term top 10 holdings such as Microsoft in technology or BlackRock in financials. But her distinctive approach to income investing is also evident in the portfolio makeup. Consumer staples, utilities, REITs, which are common picks for strategies with an income focus, they're all underweight here.

Black: Okay. But it's really hard to beat the stock market for a US active manager. So, to get a Gold rating is quite rare in this space.

Khizou: Sure. So, she's a very good stock picker. And her quality focus actually helps, for example, to hold out better in challenging markets than her peers. And she's able to also capture the upside when the markets are rallying. So, the combination has actually resulted in a very strong track record for this strategy.

Black: Okay. And what's fund number two?

Khizou: So, the fund number two is actually the Silver-rated BNY Mellon Real Return. So, this strategy is run in a collegiate manner by the Real Return team, led by Suzanne Hutchins, who actually took officially from former manager Ian Stewart, well-known in the industry, in 2019. She's an experienced manager, and she's been a long-standing member of the Real Return team. Hutchins is supported by an experienced cast as well, including Andrew Warwick, who has strong quantitative and derivative trading skills.

Black: But absolute return has been really out of favor. Particularly last year, we saw some big outflows, but you still have conviction in this fund.

Khizou: Yeah. As you are aware, last year has been quite a challenging period for this space. There's been massive outflows, more in some strategies than others. So, our conviction in this strategy is on the back of the experience of this team, but also in its process, which is underpinned by the well-known and distinctive Newton thematic approach, which is adapted here to the absolute return and capital preservation of this strategy. So, this strategy has done well in every year, including in 2008 and has comfortably met its objective, which is not always the case in this space.

Black: Okay. And what's our final fund?

Khizou: The final one is again a US fund and it's Alger Smart Cap Focus which is run by Amy Zhang, who is a proven manager with extensive expertise in US small cap. Here again, like in the first one, her approach stands out. Rather than focusing on market cap like most of her peers, she defines her universe in terms of revenues, focusing on firms with operating revenues of $500 million or less and whose products, services satisfy emerging needs. So, that approach and the thinking points her to innovative technology names and healthcare names which have tended to consume over 80% of this portfolio.

Black: Okay. So, it's great that we've got three female-run funds here, but there aren't that many when you think about the whole investment universe. Is that something you are aware of when you're meeting managers?

Khizou: Yes. I mean, overall, it's reflective of the industry, financial investment industry, and across all asset classes we cover, we mostly met male managers. We don't see many female managers in the industry. There are very few and as a female, it's always pleasant to meet successful ones running successful products as well.

Black: Well, thank you so much for your time.

Khizou: Thank you.

Black: And thanks for joining us.

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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Holly Black  is Senior Editor, Morningstar.co.uk


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