New Ratings
BGF Global Corporate Bond – Bronze
Carlos Lucar
Lead manager Owen Murfin has been at the helm of this fund since its inception in 2007. He is part of BlackRock’s nine-strong global bond team and serves as the lead on global credit strategies. Murfin and the team employ a disciplined relative value approach here aiming to outperform the Barclays Global Aggregate Corporate Index USD-hedged by at least 100 basis points (gross of fees) annualised over a market cycle. Although the objective is moderate in our view, it’s aligned to the approach--the manager aims to generate most of the outperformance from relative value calls on sector rotation, security selection and yield curve trades across global credit markets, while putting lower emphasis on directional strategies. In our view, the backing of BlackRock’s deep resources is an advantage here. Moreover, we believe Murfin’s relevant experience and long tenure at the firm further enhances his ability to exploit the depth of resources at BlackRock and underpin our conviction in the fund.
iShares MSCI USA Small Cap – Bronze
Monika Dutt
This fund tracks a well-diversified portfolio and we have conviction in its ability to outperform its U.S. small-cap equity peers over the long haul. Small-cap stocks are usually less established names which can lead to higher transaction costs. The MSCI USA Small Cap Index addresses liquidity issues by applying buffer zones. Indeed, its efficient index construction has aided performance. The fund bested the average U.S. small-cap equity passive and active fund over a three- and five-year risk-adjusted basis. But with an ongoing charge of 0.43%, it is expensive relative to its direct ETF rivals.
iShares S&P Small Cap 600 – Silver
Monika Dutt
This fund’s efficient index construction, well representative portfolio and mild profitability tilt give it an edge over other US small-cap equity funds. In terms of performance, this ETF’s risk-adjusted returns have ranked in the first quartile of its Morningstar category during the trailing three- and five-year periods. In addition to its solid performance, we value iShares’ strong fund management process. However, with an ongoing charge of 0.40%, this fund could be cheaper.
Muzinich Global Tactical Credit – Bronze
Carlos Lucar
Lead manager and head of public markets Michael McEachern brings a wealth of relevant market experience to this fund. He is supported by a team of experienced portfolio managers who specialise in U.S., European and emerging markets investment-grade and high-yield corporate credit, which we view positively given the fund’s global opportunity set.
They rely on the firm’s asset allocation group for formulating top-down views, while the 17-member team of analysts is tasked with security selection. This multi-sector credit strategy aims generating 500 basis points over LIBOR (gross of fees) over a market cycle, while keeping volatility below 5%. Its emphasis on downside risk mitigation is a key feature here. Overall, we believe the manager’s relevant experience and support base combined with the disciplined investment approach should result in strong risk-adjusted returns over a market cycle.
SPDR Russell 2000 US Small Cap – Bronze
Monika Dutt
This low-cost and well-diversified fund is likely to continue outperforming its category peers over the long haul, despite tracking an index that is prone to higher transaction costs. Although small-cap stocks are usually less established names which can lead to higher transaction costs, SPDR has been able to mitigate liquidity costs by using an optimisation process. In terms of performance, this fund bested the average U.S. small cap equity active and passive fund since its inception in 2014. The fund’s ongoing charge of 0.3% is one of the lowest among all US small-cap equity exchange-traded funds.
