Jonathan Miller: Welcome to the Morningstar Manager Check-up; our analysts’ latest rating updates. We start with the Lazard Emerging Markets fund managed by James Donald. The process focuses on buying companies showing signs of improving their financial productivity but are also trading at reasonable valuations. That contrarian tilt saw the fund suffer in 2013 and 2014 in the emerging market sell off. But our qualitative assessments led us to believe Donald was sticking to a time tested process.
Sticking to our long term view of managers we continued to have a positive view and the fund bounced back last year, outperforming by 13%. He stuck to his guns in areas such as Brazil, Russia and Turkey and was rewarded. We also like the people and stability of the team and have maintained our Silver Rating.
Next is the Nordea European Value fund, managed by Tom Stubbe Olsen for nearly 20 years. Now something key to note is this isn’t a pure value approach in the true sense of the word. We see this in the fund’s profile where we don’t really find the typical value metrics when we dig into the portfolio’s holdings.
What Olsen looks for though is companies that appear to be undervalued, in terms of their earnings power, measured by their cash flow. He does show patience as he waits to be rewarded, which is something we like and he’s shown this characteristic over the years. A recent example being a significant underweight to consumer defensives that had impacted performance. But he bided his time and stock selection has helped the fund outperform in 2015 and 2016. Our positive view here is reaffirmed with a Morningstar Analyst Rating of Bronze.
Finally we have the Robeco BP US Large Cap Equities fund, whose US mirror has a 20 year track record. Mark Donovan is the main man here along with David Pyle, backed by a large analyst team that boasts an average tenure of more than ten years at the firm. This is a value strategy, that looks for companies with attractive valuations relative to cash flows and earnings, and they also favour firms with strong or improving fundamentals. To avoid value traps, the team looks for positive business momentum, such as rising earnings. The long term success of this fund has seen strong risk adjusted returns. In an area that’s been tough to outperform we see a number of positives across our Morningstar Pillars and the fund retains its analyst rating of Silver.
