New Ratings
BGF Asia Pacific Equity – Neutral
Germaine Share
Comanagers Oisin Crawley and Chris Hall have been at the helm for a relatively short time, joining the roster here on 2 July 2014 and 30 June 2015, respectively. They use a style-agnostic investment process to achieve a portfolio dividend yield target of 4% over the market cycle. They have brought a few enhancements to the process, such as introducing a more structured framework to analyse dividend strategies. While this has resulted in encouraging fund returns so far, it is still early days and we need more time to build our conviction.
Comgest Growth GEM Promising Companies – Bronze
Mathieu Caquineau
Comgest has a strong franchise in emerging markets investing. This fund follows the firm’s proven quality growth strategy, though it is applied to companies at an early stage of their development. We think such a robust strategy is a key advantage in an emerging markets segment prone to higher risks. A potential drawback is the fact that the team in charge has not worked together for a long time but we think they are qualified and have large resources at their disposal. The three portfolio managers work in a truly collegial way and are supervised by Wojciech Stanislawski. We think very highly of Stanislawski given his depth of experience in emerging markets and his key role since 1999 on the firm’s Gold-rated flagship fund,
Eastspring Investments Japan Dynamic – Bronze
Don Yew
This strategy via the institutional share class has been managed by Dean Cashman since its inception on 5 July 2006. Cashman has dedicated most of his 28-year investment career to managing Japanese equities, and we hold him in high regard. He is also one of the founding members of the Japan equity team, which is one of the most experienced among peers. The fund employs an unconstrained strategy towards investing in the Japanese equity market and has delivered excellent long-term returns. We note that the fund is currently soft-closed to new investors--a prudent step towards managing capacity, in our opinion, given the fund’s concentrated portfolio and considerable allocation to smaller-cap stocks.
Jupiter Absolute Return – Bronze
Randal Goldsmith
Manager James Clunie applies a structured stock selection approach at this strategy, which is differentiated by his emphasis on short selling. His investment approach has proved successful over the long term, while delivering at different times from other managers and making the fund interesting as a portfolio diversifier as well as on standalone basis.
Upgrades
Templeton Emerging Markets – Neutral
Germaine Share
We are optimistic about the appointment of strategy leads Chetan Sehgal and Carlos Hardenberg, who have built strong track records on the Templeton Emerging Markets Group’s emerging-markets small-cap and frontier-markets strategies, respectively. As strategy leads, they are mandated to ensure greater consistency among the various vehicles under the Templeton emerging-markets strategy. To that end, they took over the UK-listed Templeton Emerging Markets Investment Trust in late 2015 and have delivered promising returns so far.
While Dennis Lim and Tom Wu remain named managers on the fund, we are encouraged by the oversight provided by Sehgal and Hardenberg. The strategy leads have brought about sensible improvements to the investment process, which focuses on stocks that appear cheap relative to their five-year projected earnings potential. This includes increasing the number of portfolio holdings to mitigate concentration risks and introducing portfolio construction guidelines around sector and country allocations. Given a number of enhancements being made to the fund, we believe it deserves a second chance.
