Jonathan Miller: Welcome to the Morningstar Manager Check-up, for ratings updates from our analyst team. First up is Schroder US Smaller Companies, managed by the seasoned Jenny Jones, who’s been in charge of the fund since 2002. The bottom-up portfolio blends three types of companies; mispriced growth, steady Eddies and turnaround situations. The team of analysts each specialise in a sector and have material input in executing the investment process.
Over time, this shows resilience in falling markets, but can underperform in strong markets. Overall, the fund’s highly experienced manager and robust process give us high conviction that investors can continue to be provided with strong risk adjusted returns. And we maintain our Analyst Rating of Silver.
Next up is the Investec Asia ex Japan fund, that’s been run by Greg Kuhnert for over a decade. He uses the in house four-factor model to screens stocks across key factors, which is then married up with fundamental analysis. We believe the process is used to good effect and has been tested in a variety of market conditions. In terms of portfolio construction, we also like the fact that balance and diversification result in the volatility of performance being pretty much in line with the index.
Key overweights are in China and technology, while India, which is a favourite of many a manager in this sector, is an underweight. This is due to concerns on currency weakness and downward revisions. All told, the positives we see, which also include competitive fees for the clean share class, give us confidence in our analyst rating of Silver.
Finally, the Stewart Investors Global Emerging Markets Leaders Fund which underwent some change in October 2016, with Jonathan Asante handing the reins to Ashish Swarup.
This is his first portfolio manager role at this house and following our recent interview we’ve maintained our Analyst Rating of Bronze. We’ve wanted to monitor how he integrates himself into the Stewart Investors’ process and we believe we’re seeing continuity. There’s also a team of seasoned analysts around him whose research output drives the quality aspect of the in-house approach.
In a rebound for emerging markets last year, the fact the fund underperformed isn’t a surprise. It doesn’t tend to participate fully in strong cyclical rallies and the long-standing consumer staples exposure currently stands at 30%. The fund remains soft-closed. But overall, for those invested here, we believe that with the change rolled out, we still see reasons to remain positive on this fund.
