Morningstar Fund Ratings: Weekly Round-up

In this week's ratings round-up, we unveil the latest upgrades and downgrades from Morningstar analysts 

Jose Garcia Zarate 21 September, 2021 | 12:04AM
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New Ratings

Amundi IS Prime Euro Government ETF – Gold

Jose Garcia-Zarate

The eurozone government bond market is highly liquid and opportunities to add value over a standard benchmark are limited over the long-term. This makes an all-issuer, all-maturity and low-cost indextracking approach such as Amundi Prime Euro Government ETF akin to a default option for investors seeking a core holding for this market exposure. Besides its highly competitive 0.05% ongoing charge will provide a solid tailwind to returns. The strategy is firmly poised to deliver risk-adjusted returns above the category average and is awarded a Morningstar Analyst Rating of Gold.

Upgrades

Comgest Growth Europe EUR Z – Gold from Silver

Mathieu Caquineau, CFA

Comgest Growth Europe benefits from a strong, stable and cohesive team of ten fund managers and analysts. The fund’s time-tested growth strategy is applied with discipline and has delivered outstanding risk-adjusted returns for investors in the long run. While we reiterate the People and Process pillars at High and High, respectively, changes in the competitive landscape within the Europe Large-Cap Growth Morningstar Category has led to the clean share class Z to earn a Gold Analyst rating compared with Silver previously. 

Downgrades

Comgest Growth China – Neutral from Bronze

Samuel Lo, CFA

Our conviction in Comgest Growth China has diminished as David Raper, the strategy’s most experienced and longest-tenured comanager, will step down from the strategy effective 1 Oct 2021. Raper has 22 years of investment experience, and he has achieved a solid long-term track record on this strategy since he became involved in 2011. He will leave the strategy in the hands of the three existing and less experienced comanagers, namely Baijing Yu, Jasmine Kang, and Jimmy Chen, who have between 12 and 16 years of experience. While Yu and Kang have developed solid investment skills since they became comanagers in 2014 and 2015, respectively, Chen is still ramping up as a first-time portfolio manager since being added to the roster in April 2019. Coupled with our ongoing concerns around the team’s relatively limited coverage footprint in Chinese companies, particularly in A-shares, we are cautious about the management team without its long-term skipper. Meanwhile, we have ongoing reservations around the quality-focused investment process’ applicability and efficacy in China. Therefore, the strategy’s People rating has been downgraded to Average from Above Average, while the Process rating is maintained at Average. The Morningstar Analyst Rating of the strategy has been downgraded to Neutral from Bronze across all share classes as a result.

Rerated from Under Review

Nomura Funds Japan Strategic Value – Neutral from Under Review         

Hiroaki Sato

Yoshihiro Miyazaki is taking over the strategy from predecessor Kentaro Takayanagi effective 1 October 2021, along with the analyst role from the departed analyst Kunihiko Mikuriya in August 2021. We consider Miyazaki an appropriate candidate to take over the strategy from a continuity perspective. However, we are cautious in the team’s increased workload and elevated turnovers. We need time to build conviction on how Miyazaki will work with the team and thus, we have lowered the People pillar to Average from Above Average. As a result, all share classes are rated Neutral, including a downgrade from Bronze in the cheaper share classes.

  • 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

Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe