Jonathan Miller: Welcome to the Morningstar manager check-up, where this week I’ll be covering three new funds we’ve recently added to our coverage. Starting with Artemis Global Select run by Simon Edelsten , Alex Illingworth and Rosanna Burcheri. They’ve got a global equities background and been together since 2011 when the fund was launched. The starting point is identifying long term growth trends, which gives a steer to industries they’ll favour.
They then look for quality companies trading at attractive valuations, have sustainable cash flows and high barriers to entry. This means there’s relatively low exposure to more cyclical parts of the market. The process and thoughtful portfolio construction will likely see returns holding up well in challenging conditions while keeping up in rising markets. So in terms of generating compelling risk adjusted performance we have a positive view and the fund has a Bronze Rating.
Next up is the Pyrford Global Total Return fund. The emphasis here is stable real returns and to avoid losing money in any 12-month period. We see this as a strong choice for investors who also want exposure to a transparent and understandable portfolio. The fund’s only invested in equities, highly rated government bonds and cash. Nothing else. The team then uses four main levers: asset allocation, stock selection, bond duration and currency positioning.
The objective has still been met in recent years even though they’ve been bearish on government bonds with over half the portfolio held in very short term debt, so pretty much cash. Overall we like the strategy, with a stable team throughout its existence and fees are competitive. The fund is therefore awarded a Morningstar Analyst Rating of Silver.
Finally the AXA WF Global High Yield Bonds fund which has been managed by Carl Whitbeck and James Gledhill since September 2012. Whitbeck leads on US high yield, while Gledhill manages the European exposure, and they’re backed by a dedicated team of analysts. They typically hold a core of shorter-dated high yield bonds. This is to mitigate against volatility from higher-risk issuers, where they’ve generally held an overweight to CCC’s.
In terms of sector exposure this tends to reflect the team's preference for companies with stable business models and predictable cash flows. It’s worth noting that in the high yield space high transaction costs aren’t captured in the index so we take this into account as part of our assessment.
We’re confident in the team’s ability to effectively execute the process and add value over a full market cycle on a risk adjusted basis. We’ve therefore initiated coverage with a Morningstar Analyst rating of Bronze.
