Morningstar Manager Check-Up

VIDEO: Our latest update from the Morningstar Manager Research team includes a look at a UK, US and a Global fund

Holly Black 26 November, 2020 | 11:17AM
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Holly Black: Welcome to the Morningstar Manager Check-Up. I'm Holly Black. With me is Fatima Khizou. She is on the manager research team at Morningstar. Hello.

Fatima Khizou: Hello.

Black: So, you're going to talk us through our latest batch of fund rating reviews. Where would you like to start?

Khizou: So, we'll start with UK and we will go through BlackRock UK Smaller Companies Fund. So, this strategy has been under the leadership of manager Ronald Arnold since March 2015. Arnold is an experienced small cap manager who has been involved in the management of small and midcap UK equity portfolios since 2006 and has built a solid long-term track record of outperformance through his small cap mandates. He is supported by experienced individuals who form part of the BlackRock Emerging Companies team. So, here, the managers follow a well-structured and detailed bottom-up approach while targeting quality companies that are undervalued relative to their growth potential.

Black: Okay. And what is fund number two?

Khizou: So, for the fund number two we will be moving to the US and it's the PGIM Jennison US Growth. So, this US growth fund is managed by a highly experienced and collaborative management team supported by a deep pool of sector specialists. (Dover Investments) team behind the strategy is among the industry strongest in our view. They look for market leaders with above average top-line growth focused on the durability of a company growth. They favor companies with healthy financials, strong research and development capabilities and defensible if not dominant franchise. So, the portfolio is often dominated by mega-cap stocks that are relatively trading on higher priced multiples. The fund plays to the team's stock picking strength by overweighting consumer discretionary, communication services sectors. Another area of sizable exposure and strength here is technology which account for over 40% of the portfolio. Consistently growth stock picking over the long haul has led to a strong track record for this strategy.

Black: Okay. Well, I was going to ask how the fund manager is adding value because the US is so hard to beat, but those sector weightings seem to answer my question. So, instead I shall say what is fund number three?

Khizou: So, the fund number three is a global strategy, and it's GuardCap Global Equity Fund which is managed by two veteran quality growth managers Michael Boyd and Giles Warren. So, they've worked together for more than 20 years and have managed successfully global equity mandates. Another strength of this strategy is its well-structured, intensive and thorough bottom-up process. So, the philosophy adheres to strict quality and growth criteria, but it is also mindful of valuation.

Black: So, you say the managers have worked together for 20 years. Is that something you like to see?

Khizou: Yes. So, they've worked together and before joining GuardCap, they worked in another shop and managed two global equity funds as well. We like to see stronger experience in this space and the people that work together well as well and have shown strong picking in this space.

Black: Fatima, thank you so much for your time. For Morningstar, I'm Holly Black.

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,


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