Morningstar Fund Ratings: Weekly Round-up

The latest batch of Morningstar fund rating reviews features three upgrades and two upgrades, with one bond fund upgraded to Gold

Germaine Share 2 September, 2020 | 10:01AM
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Fund Ratings

New Ratings

Fidelity Asian Bond – Silver

Germaine Share

We have initiated coverage on Fidelity Asian Bond. The Asian investment grade focused strategy is in the reliable hands of Eric Wong, who has helmed the strategy since October 2013. He came across as an articulate and passionate investor, and we are further reassured by the strong track records on his other emerging market debt strategies. He is supported by a well-resourced and stable team of nine Asian credit analysts. The team adopts a clearly defined investment framework which has been proven over time, and Wong’s presence since 2013 ensures its consistent application. Under our enhanced ratings framework which puts more emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the clean share class Y-Acc-USD is initiated at Silver. Other share classes are either rated Silver or Bronze, depending on their costs.


AXA Framlington UK Select Opportunities – Bronze from Neutral

Jonathan Miller

Chris St John took over this strategy on 31 Dec 2018, following the retirement of longstanding manager Nigel Thomas. St John has demonstrated a capable eye for identifying growth companies in other UK mandates he runs. Stock selection has been a key driver of outperformance for these offerings and he displays a true appreciation for companies, what’s driving them and their standing among competitors. Our increased conviction in Axa Framlington Select Opportunities results in a Morningstar Analyst Rating upgrade to Bronze from Neutral for the ZI clean share classes. Other share classes are rated Bronze and Neutral, dependent on fees.

BGF Asian Tiger Bond – Silver from Bronze

Patrick Ge

BGF Asian Tiger Bond is guided by impressive leadership and employs a well-executed team-based approach, making it a solid option for investors seeking hard-currency Asia credit exposure. The strategy benefits from final decision maker Neeraj Seth, who is one our favourite Asian credit managers. He sets the macro direction and risk budget, while co-managers Ronie Ganguly and Artur Piasecki are in charge of credit selection on a day-to-day basis. Our confidence in the co-managers, who were added as decision-makers in late 2018, have grown as they have eased into their roles. Furthermore, they are supported by a large supporting cast of experienced fixed income investors. The strategy’s consistent team-based approach, which combines top-down and bottom-up analysis, has translated to peer beating long-term results. As a result, we have reiterated our Above Average views on the People and Process pillars. Under our enhanced ratings framework, which puts more emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the clean share class D2 is upgraded to Silver from Bronze. More expensive share classes fall to Neutral.

Jupiter Strategic Bond – Gold from Silver

Evangelia Gkeka

Jupiter Strategic Bond is managed by veteran portfolio manager Ariel Bezalel, who is supported by comanager Harry Richards and assistant fund manager Vikram Aggarwal. The strategy employs a flexible investment process that combines top-down and bottom-up elements. On the top-down side Bezalel uses third-party research to inform his macro views stance, which is implemented via analysts’ thoroughly researched single-name and sector recommendations. The strategy utilises a barbell approach balancing the capital preservation features of high-quality government bonds and the income generation of high-yield debt (including subordinated financials). Bezalel’s experience, continuity at the helm and effective management of this flexible approach contribute to the clean share class (I) being upgraded to Gold from Silver. More expensive share classes are rated Silver.


T. Rowe Price Frontier Markets Equity – Neutral from Bronze

Mathieu Caquineau

T. Rowe Price Frontier Markets Equity will soon be under a new leadership. Oliver Bell will step down from the fund on January 1, 2021, to take a managerial role at the firm. Bell is an experienced investor, and his expertise in frontier markets will be missed. His replacement, Johannes Loefstrand, comes from the analyst team. He started his career in 2013 and joined the team in 2015. He has made positive contributions as an analyst, which is reassuring, but he lacks direct portfolio management experience, which is critical to make a good use of the process. Investor sentiment and flows into specific frontier countries can be overwhelming performance drivers in the short to medium term, and they work against the fund's long-term approach, which is rooted in fundamental research. With a People rating of Average and a Process rating of Average, the strategy earns a Morningstar Analyst Rating of Neutral across its share classes.  

Threadneedle Managed Equity – Neutral from Bronze

Rajesh Yadav

While we maintain our current conviction in both the manager (Above Average) and the process (Average), under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance, the Morningstar Analyst Rating for Threadneedle Managed Equity's clean Z share class is lowered to Neutral from Bronze.

Note: Under Morningstar's ratings methodology, different share classes of a fund may have a different rating

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

Germaine Share  is a Senior Analyst for Morningstar

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