Upgrades
Newton Global Equity – Bronze
Muna Abu-Habsa
The Newton Global Equity fund has been upgraded to a Morningstar Analyst Rating of Bronze. The fund previously held a Neutral rating. This fund underwent a management change in January 2012 which saw Newton veteran Jeff Munroe take charge. Munroe, who joined Newton in 1993 and became CIO in 2001, has over 25 years of investment experience, which we believe he has put to excellent use since taking the helm here. He has made changes to the structure of the team that supports this mandate, hiring dedicated analysts to facilitate better communication and more effective discussions with Newton’s global analyst team. We believe investors to be in capable hands here.
Top-down themes lie at the heart of this approach. Researchers at Newton identify themes that they believe will act as catalysts for change in the world over the next five years. The analysts are charged with looking for companies that are well placed to benefit from those themes. Munroe has continued to use this companywide process but has also made changes to reflect his investment philosophy, most notably aiming for a higher-conviction portfolio, reducing the number of holdings to 80 from nearly 120. Further, he made the decision to reduce the emerging-markets exposure of the fund, to around 3.4% from 13%, which proved timely.
Prior to Munroe taking over in January 2012, performance here was weak. Over the five-year period until the end of January 2012, the fund gained 1.73% per year; that was 162 basis points behind the MSCI ACWI Index on average each year. Performance over Munroe’s tenure has improved markedly, with the fund outpacing both the index and peers on a risk-adjusted basis to September 30 2016.
All told, we believe that Newton’s proven, macro-led thematic analysis, coupled with the continuity of process and ramped-up analyst resources, will benefit this fund under Munroe’s leadership. We have thus upgraded the fund’s Morningstar Analyst Rating to Bronze from Neutral.
