Morningstar Fund Ratings: Weekly Round-up

The latest batch of Morningstar fund rating changes features four upgrades and one downgrade

Mathieu Caquineau, CFA 6 October, 2020 | 9:04AM
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Fund Ratings

Upgrades

T. Rowe Price Emerging Markets Equity – Silver from Bronze

Mathieu Caquineau

Gonzalo Pangaro has managed T. Rowe Price Emerging Markets Equity since 2009, but his experience in emerging markets began in the 1990s, initially as a Latin America specialist. Mark Edwards, Pangaro’s co-pilot and Asia specialist, retired at the end of 2015. Since then, Pangaro has strengthened his expertise of Asian markets by closely working with the team’s Asia analysts and fund managers. The security selection has been very strong in that region, including in China, in the past four years and a half. The manager uses the team’s various regional experts and research strengths to good effect. Our growing conviction in the fund manager's expertise and his ability to use the firm’s large resources effectively earn the fund an increased People rating of High. The fund also benefits from a well-established process, focused on growth-oriented stocks. Although the strategy’s large asset base makes it less nimble than peers, the focus has always been on liquid large-cap stocks, and the strategy has been soft-closed since 2018, alleviating our concerns. The fund’s clean share class Q is upgraded to a Morningstar Analyst Rating Silver from Bronze. The cheapest classes earn a Gold, while the more expensive classes land at Bronze.

Templeton Global Total Return (Lux) – Silver from Bronze

Patrick Ge

Templeton Global Total Return’s distinct style works over the long term because of the manager’s patience and the team’s expertise, though its high-conviction approach amplifies the potential risk as well as reward in the short run. The People and Process Pillar ratings remain at High and Above Average, respectively. However, under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the Z clean share class has been upgraded to Silver from Bonze. Ratings on the other share classes range from Neutral to Gold.

Templeton Global Total Return Bond (UK) – Silver from Bronze

Patrick Ge

Templeton Global Total Return Bond’s distinct style works over the long term because of the manager’s patience and the team’s expertise, though its high-conviction approach amplifies the potential risk as well as reward in the short run. The People and Process Pillar ratings remain at High and Above Average, respectively. However, under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the Z clean share class has been upgraded to Silver from Bronze. Ratings on the other share classes range from Neutral to Gold.

RobecoSAM Sustainable Water – Bronze from Neutral

Ronald Van Genderen

RobecoSAM Sustainable Water is one of the oldest water-themed strategies and benefits from a long-tenured lead manager. Although his surrounding team has seen changes historically and his workload needs watching, we think Dieter Küffer is an asset for the strategy. We have gained more conviction in the process, as we think the improvements made since 2012 are durable and effective, and our appreciation for the integration of sustainability throughout the process has increased. Under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance expectations, the Morningstar Analyst Ratings range from Neutral to Silver. The N EUR share class sees its rating upgraded to Bronze from Neutral.

Downgrades

Candriam Global High Yield - Neutral from Bronze

Samiya Jmili

Philippe Noyard, who managed the fund since 2003, has relinquished day-to-day management in January 2020 to Thomas Joret, his co-manager since 2016. Noyard took on a global credit leadership role at Candriam, but his passing the torch does not equate to a loss of experience at the strategy’s helm. He remains actively engaged as a co-lead portfolio manager here and continues to influence most investment decisions. Under his tenure, the team has consistently plied a risk-aware and thoughtful process and built a compelling track record. Thus, we maintain Above Average scores on both the People and Process Pillars. As a result, Candriam Global High Yield’s retail R shares are downgraded from Bronze to Neutral under our enhanced ratings framework, which is also the case for the fund’s more expensive shares. Yet, its cheapest shares retain their Bronze ratings.

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

Mathieu Caquineau, CFA

Mathieu Caquineau, CFA  Senior Fund Analyst, Morningstar France