Jonathan Miller: Welcome to the Morningstar manager check-up, for the latest rating updates from our analysts. We start with the BlackRock UK Income fund where the team was restructured in 2013. The managers are Adam Avigdori, Mark Wharrier and David Goldman. They build the portfolio with a core of higher-yielding cash compounders, an element of growth names and a small amount of turnaround stocks.
Due to the focus on dividend growth, rather than pure yield, what we see is the fund having a slightly higher growth profile than the peer group average. We think there’s a balanced approach to portfolio construction and this has allowed the managers to focus on stock selection, where we believe their strengths lie. The proof has been in the results where stock selection has been the main driver of the outperformance, since the trio came together and we’ve retained the Morningstar analyst rating of Bronze.
Next up is the Invesco Pan European Structured Equity fund run by Michael Fraikin and Thorsten Paarmann. The pair are key members of the Invesco quant team and a quantitative approach has been in place on this fund since 2006. Their process focuses on low-volatility stocks, but there’s a certain leeway for positions flagged up through their fundamental indicators.
The key screenings on this side being earnings revisions, relative strength, management behaviour and valuation. What you get overall with this fund is a lower beta than the market coming in at around 0.8.
So, it won’t shoot the lights out in sharply rising markets, but does tend to do a better job of containing losses during market downturns. Over the last decade it’s been among the highest-returning and least volatile funds in its peer group and retains its Silver rating.
Finally, we have the T Rowe Price Global Growth Equity fund. It’s been managed by Scott Berg since its inception in 2008 and he’s backed by an experienced team of analysts. Berg looks for companies with strong growth prospects in industries with attractive dynamics and whose shares are trading at a discount to fundamental value. He’s constantly on the road meeting companies, getting first-hand knowledge of where he’s committing capital.
From a style perspective, this sits very much in the growth camp and over the long term has outperformed this index. There’s a 25% position to emerging markets, so a large overweight, and while that explained a difficult patch a couple of years ago, the underperformance at the time wasn’t extreme with stock selection helping to counter this. We continue to believe the fund can outperform across the cycle and it keeps its Morningstar Analyst Rating of Bronze.
