New Ratings
JPM Global Macro Sustainable C acc EUR – Bronze
Francesco Paganelli
We have initiated coverage on the JPM Global Macro Sustainable strategy with a Morningstar Analyst Rating of Bronze for the C clean share classes, while more expensive shares earn a Neutral rating. The fund represents a well-thought-out ESG variant of the team’s flagship strategy, JPM Global Macro Opportunities. The process is adapted to deliver on its sustainability objective but retains many of the flagship's strengths. We think the team has built a disciplined and repeatable process around its macro thematic framework, while avoiding unnecessary complexity. We expect this strategy to deliver a risk-adjusted performance in line with the flagship, leading to a Process Pillar rating of Above Average. Team head Shrenick Shah has led JPM’s macro team with a good balance of continuity and progress in recent years, and the team earns a People Pillar rating of Above Average.
Upgrades
Fidelity Index UK P – Gold from Silver
Dimitar Boyadzhiev
The fund’s P share class gets a Morningstar Analyst Rating of Gold from Silver, while the more expensive A class is awarded Silver from Bronze. Fidelity UK Index Fund tracks a broad and diversified index that has proved formidable for active funds to beat. By capturing more than 98% of the UK equity market, the FTSE All-Share Index provides the broadest and most representative exposure to UK stocks, including a 30%-35% allocation to mid- and small-cap stocks, something lacking in the better-known but mega-cap-heavy FTSE 100 Index. This fund has outperformed its average peer over the past three-, five-, and 10-year periods on a risk-adjusted basis. Overall, passive funds tracking the FTSE All-Share Index stand out as an optimal choice for investors seeking exposure to the wider opportunity set available to investors. The combination of broad exposure across sectors and market-cap spectrum, and the compounding benefits of low fees (ongoing charge: 0.06%) make it a tough opponent to beat.
JPM Global Macro Opps C (acc) EUR – Bronze from Neutral
JPM Global Macro Opportunities C Net Acc – Bronze from Neutral
Francesco Paganelli
We have upgraded the People and Process ratings of the JPM Global Macro Opportunities strategy. As a result, the Morningstar Analyst Ratings for the clean share classes of the UK- and Luxembourg-domiciled funds are upgraded to Bronze from Neutral, while more expensive shares earn a Neutral rating. The strategy has regained its footing and cemented its edge over peers. The team's ability to integrate quantitative data, macroeconomic analysis, and in-depth security research with a robust risk-management framework is a key strength. We think the approach provides good value for money, with the fund’s price being cheaper than most peers’.
L&G ESG Emerging Markets Government Bond USD Index I – Silver from Bronze
Jose Garcia-Zarate
This is an interesting proposition for investors seeking exposure to hard currency emerging market debt. The ESG screening mostly results in a resulting of countries to favour those with higher credit ratings. The compounding benefits of low management fees and the benefits of broad geographical diversification are its two key advantages. The fund is likely to deliver returns above the category average and the fees levied by clean share classes are very competitive. This supports an upgrade of its Morningstar Analyst Rating to Silver from Bronze for the clean I share class while the K share class retains its Silver rating.
SPDR Bloomberg Emerging Markets Local Bond ETF – Silver from Bronze
Jose Garcia-Zarate
The case for a passive approach to investing in local-currency-denominated emerging-markets government debt looks compelling, and this SPDR ETF stands as an above-average strategy. The compound benefits of low cost, broad diversification and higher average credit quality of the portfolio relative to other passive peers have played out well over the long-term. This supports an upgrade of its Morningstar Analyst Rating from Bronze to Silver.
Downgrades
AXA World Funds Framlington Europe Real Estate Securities F – Bronze from Silver
Thomas De fauw
This team’s solid expertise and stability combined with a proven approach that favours better-quality stocks make AXA WF Framlington Europe Real Estate Securities a standout in the property - indirect Europe Morningstar Category. Although we retain the People and Process Pillar scores at respectively High and Above Average, rating changes among rivals mean that the fund’s Morningstar Analyst Rating drops from Silver to Bronze for its F Cap EUR and F Dis EUR share classes. The I Cap EUR share class maintains its Silver rating while all other share classes are rated Bronze.
Rerated from Under Review
BGF Emerging Markets Bond D2 – Neutral from Under Review
Shannon Kirwin
BGF Emerging Markets Bond was placed Under Review following BlackRock’s January 2022 announcement that the firm’s emerging markets debt chief, Sergio Trigo Paz, was stepping down from his role. Morningstar has now downgraded the Morningstar Analyst Rating for the fund’s clean D2 share class to Neutral. It was previously rated Bronze prior to the announcement. Trigo Paz had overseen the investment process here for a decade alongside the fund’s day-to-day manager Michel Aubenas. In addition to establishing the team’s broader investment framework, Trigo Paz led team’s weekly investment meeting, where he had the final say in establishing its top-down view. His replacement as the head of the team and as comanager on this fund, Amer Bisat, boasts three decades’ experience as an IMF economist and fund manager but does not have a public track record managing a strategy like this one. Uncertainty has also been introduced through BlackRock’s decision to merge the nine-person emerging-markets debt team previously led by Bisat within the firm’s Global Allocation division with the 12-person team formerly led by Trigo Paz. A Neutral rating remains appropriate while we observe how the organisational changes impact the investment process here.
BGF Emerging Markets Local Currency Bond D2 – Neutral from Under Review
Shannon Kirwin
BGF Emerging Markets Local Currency Bond was likewise placed Under Review in January 2022 following news of the departure of BlackRock’s head of emerging markets debt, Sergio Trigo Paz. Prior to the announcement, that fund’s clean D2 share class carried a Morningstar Analyst Rating of Neutral. That rating has been reinstated following our evaluation of the changes. As at BGF Emerging Markets Bond, Sergio Trigo Paz had played an important role in overseeing this fund’s investment process and establishing the investment team’s macro view. While the fund’s day-to-day lead manager, Laurent Develay, remains in place, new emerging markets debt chief Amir Bisat has replaced Trigo Paz as a named co-manager on the strategy. Given the possibility of further changes to the investment process here, we confirm the fund’s Neutral Rating.
Moved to Under Review
FvS Multi Asset Range - Natalia Wolfstetter
As part of Morningstar's enhanced methodology for Analyst Ratings, different share classes have different Ratings
