New Ratings
Pictet-Asian Local Currency Debt – Neutral
Don Yew
This fund is comanaged by Wee-Ming Ting, Philippe Petit, and Simon Lue-Fong; however, day-to-day management responsibilities lie with Singapore-based Ting and Petit, who have managed the fund together since July 2007. Together, and with the addition of Carrie Liaw in May 2015, we consider the breadth and depth offered by the three-member Singapore-based investment team average on a peer-relative basis. The fund uses a well-established investment process that is employed across Pictet’s emerging-markets-debt strategies and has delivered respectable peer-relative returns over the long term.
Upgrades
Fidelity Asian Values – Bronze
David Holder
This investment trust has been upgraded from a Neutral rating. In Nitin Bajaj, we believe that it benefits from a high calibre fund manager backed by substantial regional resource. We consider his disciplined, stock-specific investment approach, primarily within Asian small-cap stocks, to be well executed and over the long term we expect this differentiated approach to add significant value for investors.
We have a high regard for Bajaj and his consistency of approach, which is reflected in the impressive performance profile of both this trust and the Fidelity Funds Asian Smaller Companies SICAV that he has run in an identical manner for three years. The overall merit of the proposition now gives us a material level of confidence in the fund.
Downgrades
Charlemagne Magna Latin American – Neutral
Lena Tsymbaluk
Over the last eighteen months the fund has seen continued outflows and the diminishing asset base has had a negative impact on the fund’s ongoing charge. While we think the fund remains a solid choice for Latin American equities exposure, the high fees, which are likely to be a drag on future performance, lessen the fund’s attractiveness. We therefore downgrade the fund’s rating from Bronze to Neutral.
Henderson Global Technology – Neutral
Samuel Meakin
Henderson Horizon Global Technology – Neutral
Samuel Meakin
Stuart O’Gorman has managed this strategy since 2001 using a benchmark-aware approach, leading to a portfolio with a larger-cap bias compared with the category average and with a relatively low active share. The increasing prevalence of passive funds in the technology sector has made it a more competitive area of the market, particularly for an index-aware strategy such as this.
The strategy has underperformed the index over three and five years, and its volatility has also increased. We now find it a less compelling proposition relative to other options available to investors seeking dedicated technology exposure and have moved the rating on both funds from Silver to Neutral.
NN Global Real Estate – Bronze
Ronald van Genderen
We have downgraded this fund's rating to Bronze from Silver. We remain of the opinion that the fund can profit from a very experienced, stable, and cohesive team. Although the team is relatively small, they apply a sensible and distinctive process which, given its cluster approach, leads to a very concentrated portfolio. This process has been applied since August 2004, and as of that date, the fund has performed better than the average for the Property-Indirect Global Morningstar Category.
Nevertheless, over this long period, the fund has structurally underperformed its benchmark, the 10/40 GPR 250 Global Index. This is our main reason for lowering our conviction. Another source of concern is the quite consistent negative stock-selection results in Japan.
