Morningstar Fund Ratings: Weekly Round-up

In this week's ratings round-up, Morningstar analysts upgrade Fidelity Special Situations and Fidelity Special Values to Gold

Fatima Khizou 11 May, 2021 | 9:10AM
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Upgrades

Fidelity Special Situations – Gold from Silver

Fatima Khizou

Fidelity Special Situations’ experienced manager continues to impress with his insight and approach to portfolio construction. Alex Wright has managed it since September 2012, initially on the closed-end Fidelity Special Values investment trust before taking over this open-end vehicle in January 2014. His approach targets unloved companies that have the potential to recover based on factors such as a unique business model, corporate change, or offering exceptional value. Wright is a thoughtful investor whose knowledge of the portfolio, and insights at company and industry levels, add value to the approach. Coupled with Fidelity’s broad analyst ranks, and a well-defined and rigorous investment process, this contributes to an upgrade to a Morningstar Analyst Rating of Gold on all share classes (previously Silver).

Fidelity Special Values (FSV) – Gold from Silver

Fatima Khizou

The strategy’s experienced manager continues to impress with his insight and approach to portfolio construction. Alex Wright has managed it since September 2012, and his approach targets unloved companies that have the potential to recover based on factors such as a unique business model, corporate change, or offering exceptional value. Wright is a thoughtful investor whose knowledge of the portfolio, and insights at company and industry levels, add value to the approach. Coupled with Fidelity’s broad analyst ranks, and a well-defined and rigorous investment process, this contributes to an upgrade to a Morningstar Analyst Rating of Gold (previously Silver).

BlueBay Investment Grade Bond – Bronze from Neutral

Evangelia Gkeka

The BlueBay Investment Grade Bond strategy benefits from a consistent investment approach and an experienced portfolio management team. Marc Stacey and Tom Moulds are co-leads, while Andrzej Skiba has been involved in the US bottom-up and top-down calls. They are backed by six corporate credit analysts with an average of close to 19 years’ experience, who play an active role in suggesting trades for the strategy. Bottom-up security-selection is the main driver of returns, while top-down drivers (term structure and credit beta) are typically secondary. The well-defined and consistent investment process has led to solid returns since inception and significant outperformance over peers in a range of different market regimes in recent years, leading to an upgrade of the Process Pillar to High from Above Average. This contributes to the Morningstar Analyst Rating for the strategy’s clean share class (C EUR) being upgraded to Bronze from Neutral. Other share classes are rated between Silver and Neutral, depending on fees. 

Downgrades

JPMorgan China A-Share Opportunities – Bronze from Silver

Claire Liang

JPMorgan China A-Share Opportunities is helmed by a solid management duo backed by vast analytical resources and employs a well-codified secular-growth-focused investment approach that has proved to be successful in the China A-shares market over the past few years. We reiterate our conviction in the strategy and maintain both the People and Process ratings at Above Average. However, under our enhanced ratings methodology, which places a strong emphasis on fees, the increased competition from lower-priced rivals in the China equity A-shares Morningstar Category has led to the Morningstar Analyst Ratings for all share classes of this Hong Kong unit trust to drop to Bronze from Silver.

JPMorgan Multi-Asset Income – Neutral from Bronze

JPMorgan Multi Income – Neutral from Bronze

William Chow

JPMorgan Multi-Asset Income strategy has a flexible mandate to generate income which it has done so consistently but its total return lagged its category index since its inception to March 2021. People rating is anchored at Average due to the elevated portfolio manager turnovers in recent years. The leadership of lead manager Michael Schoenhaut and his battle-hardened process on JPMorgan Multi-Asset Income, honed since the strategy’s founding in 2009, are positives which justifies the retention of its Above Average Process rating. Under our enhanced ratings framework, which places a greater emphasis on fees, the strategy earns a Morningstar Analyst Rating of Neutral for all share classes. This represents a downgrade from Bronze for the cheapest share class.

  • As part of Morningstar's enhanced methodology for Analyst Ratings, different share classes have different Ratings

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

Fatima Khizou  is an Investment Research Analyst for Morningstar