Morningstar Fund Ratings: Weekly Round-up

In the latest ratings round-up, a new sustainable fund is rated Silver and two managed portfolio funds are rated Neutral

Natalia Wolfstetter 26 January, 2021 | 9:10AM

morningstar rating

New Ratings

AAF-Parnassus US Sustainability Focussed - Silver

Natalia Wolfstetter

This ABN Amro fund is subadvised by Parnassus Investments, a sustainability-focused US asset manager. Todd Ahlsten, the chief investment officer of Parnassus, became lead manager of the strategy in 2002. Ben Allen, CEO and president of Parnassus, became a comanager in 2012. They are high conviction, patient investors, who pay close attention to downside risk. The resulting portfolio is focused yet offers downside protection. It excludes companies that derive significant revenue from alcohol, tobacco, weapons, fossil fuels, nuclear power, or gambling. Additional ESG, quality, and valuation screens are applied. From there, the managers look for companies with sustainable competitive advantages, increasingly relevant products or services, exemplary management, and ethical practices. The fund’s solid leadership and well-executed, time-tested approach earn its cheapest share classes a Morningstar Analyst Rating of Silver and its most expensive a Bronze. 

BSF Managed Index Portfolios Defensive – Neutral

BSF Managed Index Portfolios Moderate – Neutral

Thomas De fauw

Investors in BSF Managed Index Portfolios (Defensive & Moderate) benefit from a systematic investment approach and reasonable fees. We draw comfort from the high degree of collaboration within BlackRock’s Model Portfolio Solutions team, but Rafael Iborra’s limited experience in a lead role that includes significant discretionary powers keeps our conviction muted for now. Unlike traditional allocation strategies, this fund is actively managed to keep within volatility limits rather than target a strategic equity-bond mix which means that allocations can swing substantially.

The team follows a fundamentals-driven and systematic approach that favours attractively priced asset classes but also incorporates insights such as earnings momentum and sentiment. Despite the quantitative approach and continuous calibration of the model, the lead manager has leeway to override the team’s model in case he disagrees with the signals. Views are executed through 30-40 low-cost iShares ETFs that track broad, single-country, thematic and factor indices. The thematic angle, introduced in 2020 adds to the complexity of the process and gives us pause. We initiate coverage with a Morningstar Analyst Rating of Neutral for all share classes.

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.

About Author

Natalia Wolfstetter  ist Director Fund Analysis bei Morningstar

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