New Ratings
Stewart Investors Global Emerging Markets Sustainability – UK – Silver
Andrew Daniels
Stewart Investors Global Emerging Markets Sustainability is run by the 12-member Sustainable Funds Group within Stewart Investors, and it’s been led by Jack Nelson since May 2017. Nelson, who joined the firm in 2011 after receiving his bachelor’s degree, is less experienced than many emerging-markets equity managers. That said, he has been a comanager on the strategy since 2014 and has since been groomed under the well-regarded former lead manager David Gait, who is still a comanager here and remains actively involved. Not only does Nelson demonstrate an intimate knowledge of current and prospective holdings, but he has also done an excellent job adhering to Stewart Investors’ best-in-class investment approach.
Nelson seeks stocks led by reliable management teams that can deliver sustainable and predictable growth through pricing power, franchise strength, and limited regulatory oversight. The team homes in on firms whose revenues are less likely to be impacted during economic downturns, which has led the portfolio to be among the least volatile options in the global emerging markets equity Morningstar Category over the long term. Overall, conviction in the investment team and approach employed lead us to initiate Morningstar Analyst Ratings of Silver for the strategy’s cheapest share classes – including the B Acc GBP share class – while the more expensive share classes earn Bronze ratings.
Stewart Investors Global Emerging Markets Sustainability – Ireland – Silver
Andrew Daniels
Stewart Investors Global Emerging Markets Sustainability is run by the 12-member Sustainable Funds Group within Stewart Investors, and it’s been led by Jack Nelson since May 2017. Nelson, who joined the firm in 2011 after receiving his bachelor’s degree, is less experienced than many emerging-markets equity managers. That said, he has been a comanager on the strategy since 2014 and has since been groomed under the well-regarded former lead manager David Gait, who is still a comanager here and remains actively involved. Not only does Nelson demonstrate an intimate knowledge of current and prospective holdings, but he has also done an excellent job adhering to Stewart Investors’ best-in-class investment approach.
Nelson seeks stocks led by reliable management teams that can deliver sustainable and predictable growth through pricing power, franchise strength, and limited regulatory oversight. The team homes in on firms whose revenues are less likely to be impacted during economic downturns, which has led the portfolio to be among the least volatile options in the global emerging markets equity Morningstar Category over the long term. Overall, conviction in the investment team and approach employed lead us to initiate Morningstar Analyst Ratings of Silver for the strategy’s cheapest share classes – including the VI USD Acc clean share class – while the more expensive share classes earn Bronze ratings.
Upgrades
Fidelity Germany – Gold from Silver
Natalia Wolfstetter
Fidelity Germany benefits from an experienced manager with strong stock-picking skills and extensive analytical support. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, cheaper share classes, including the Y clean share class, are upgraded to a Morningstar Analyst Rating of Gold, while the rating for the pricier retail share classes is lowered to Bronze.
iShares Edge MSCI USA Val Fac ETF (IUVF) – Silver from Bronze
Briegel Leitao
IShares Edge MSCI USA Value Factor ETF is a solid value index strategy that adopts a sector-relative approach to weightings and targets the cheapest stocks within each sector. This approach gives the fund cleaner exposure to stocks that are truly cheap relative to their peers, while minimising active sector bets against the parent benchmark, the MSCI USA Index. The fund's strong value orientation and low ongoing charge of 0.20% build on this advantage. However, owing to its sector-relative approach, the strategy takes greater risk than most passive peers. These points collectively underpin its Morningstar Analyst Rating of Silver.
Downgrades
Lazard Patrimoine Croissance – Bronze from Silver
Samiya Jmili
Lazard Patrimoine Croissance boasts a long-tenured, seasoned manager whose investment acumen and cautious mindset have been key to the success of this strategy for three decades. Even if the lack of a clear succession plan for the lead manager -who is in his mid-sixties- is a source of concern here, we think those strengths should help the fund continue to outperform, but its high fees are a constant headwind. Under our enhanced ratings framework, which places a greater focus on fees, the fund’s Morningstar Analyst Rating is reduced.
Note: Under Morningstar's ratings methodology, different share classes of a fund may have a different rating
