Upgrades
Amundi IS MSCI EM Latin America ETF (ALAG) – Bronze from Neutral
Briegel Leitao
Amundi IS MSCI EM Latin America ETF remains the cheapest option for investors looking to gain passive exposure to the wide Latin American equity market. In line with our new methodology which places a stronger focus on fees, the fund has been awarded a Morningstar Analyst rating of Bronze, up from Neutral, indicating our conviction in the fund’s ability to outperform its category peers going forward. The fund tracks the performance of the MSCI Emerging Markets Latin America Index, a free-float market cap-weighted index covering 6 emerging market countries in the Latin America region, including Brazil, Mexico, Colombia, Peru, and new addition Argentina.
In 2019, MSCI upgraded Argentina to ‘Emerging’ status, where it had previously been classified as ‘Frontier’. Despite this index expansion, the fund still carries significant country concentration risk with 80+% allocation to the two largest member countries, Brazil and Mexico. With a 0.20% charge, the fund is the preferred option for investors looking to gain passive Latam equity exposure. Other passive funds in this category range from 0.60-0.74%, giving context to just how competitive the Amundi offering is.
JPM Japan – Silver from Bronze
Samuel Lo
JPM Japan’s experienced and capable lead manager Nicholas Weindling and the well-resourced supporting team continue to inspire confidence. Weindling follows J.P. Morgan’s quality-growth approach, which is based on the strategic classification framework that is also employed across the Emerging Markets and Asia Pacific equities team’s other offerings. We are familiar with this approach and believe it to be robust and time-tested. While we previously had some questions regarding the strategy’s asset base, which amounted to $10.1 billion as of December 2019, the team has maintained a reasonably liquid portfolio and a stable number of holdings over the years.
What’s more, the team has taken appropriate capacity management measures, including soft-closing the Luxembourg domiciled vehicle in June 2018. Overall, our conviction in the investment approach has increased, which results in a Process rating upgrade to Above Average from Average. As a result, the Morningstar Analyst Ratings for the cheapest share classes – including the C Net Acc clean share class – have been upgraded to Silver from Bronze, while the more expensive share classes are rated Bronze.
JPM Japan Equity – Silver from Bronze
Samuel Lo
JPM Japan Equity’s experienced and capable lead manager Nicholas Weindling and the well-resourced supporting team continue to inspire confidence. Weindling follows J.P. Morgan’s quality-growth approach, which is based on the strategic classification framework that is also employed across the Emerging Markets and Asia Pacific equities team’s other offerings. We are familiar with this approach and believe it to be robust and time-tested. While we previously had some questions regarding the strategy’s asset base, which amounted to $10.1 billion as of December 2019, the team has maintained a reasonably liquid portfolio and a stable number of holdings over the years.
What’s more, the team has taken appropriate capacity management measures, including soft-closing this Luxembourg-domiciled vehicle in June 2018. Overall, our conviction in the investment approach has increased, which results in a Process rating upgrade to Above Average from Average. As a result, the Morningstar Analyst Ratings for the cheapest share classes – including the C (dist) USD clean share class – have been upgraded to Silver from Bronze, while the more expensive share classes are rated Bronze or Neutral.
JPMorgan Japanese Ord (JFJ) – Silver from Bronze
Samuel Lo
JPMorgan Japanese Investment Trust’s experienced and capable lead manager Nicholas Weindling and the well-resourced supporting team continue to inspire confidence. Weindling follows J.P. Morgan’s quality-growth approach, which is based on the strategic classification framework that is also employed across the Emerging Markets and Asia Pacific equities team’s other offerings. We are familiar with this approach and believe it to be robust and time-tested. This closed-end vehicle is part of a much larger JPMorgan Japan strategy, which has seen a significant increase in its asset size to $10.1 billion as of December 2019.
While we previously had some questions regarding the strategy’s asset base, the team has maintained a reasonably liquid portfolio and a stable number of holdings over the years. What’s more, the team has taken appropriate capacity management measures, including soft-closing the Luxembourg-domiciled vehicle in June 2018. Overall, our conviction in the investment approach has increased, which results in a Process rating upgrade to Above Average from Average. As a result, the Morningstar Analyst Rating for the investment trust has been upgraded to Silver from Bronze.
JPMorgan China Growth and Income (JCGI) – Silver from Bronze
Chloe Qu
We continue to have conviction in JPMorgan China Growth and Income’s strong lead portfolio manager Howard Wang, broad analytical resources, and consistently applied, growth-oriented investment process, with its People and Process Pillar ratings both reiterated at Above Average. Under our enhanced rating methodology, which places an emphasis on fees and benchmark-relative performance, the Morningstar Analyst Rating for the trust is upgraded to Silver from Bronze.
Downgrades
HSBC Euro Government Bond – Neutral from Silver
Mara Dobrescu
We have downgraded the Morningstar Analyst Rating for HSBC Euro Government Bond to Neutral (on all share classes) from Silver previously. The fund’s veteran manager Michel Antonas stepped down at the end of March 2020, leaving the reins to Laurent Garrigue, a member of the firm’s quantitative research team. Antonas’ departure is a clear loss for investors, and the new manager lacks previous experience in running government bond mandates, which limits our conviction here. Hence, the fund People and Process pillar ratings have been downgraded to Average, resulting in a downgrade of the overall rating.
Note: Under the Morningstar Analyst Rating methodology, different fund share classes may have different ratings
