Jonathan Miller: Welcome to the Morningstar Manager Check-up, for the latest updates from our research team. We start with Aberdeen Latin American Equity fund managed by the emerging market team at Aberdeen, that we regard highly. We see strength and depth in the collegial approach, and the process has been consistently applied. There’s a strong emphasis on quality companies, sustainable, business models, high returns on assets and good corporate governance.
This quality focus is paired with a valuation discipline which ensures they don’t overpay for growth. This philosophy, combined with the focus on quality and longer-term investing, backed by a relatively stable and experienced team, sees the fund’s Morningstar Analyst Rating of Bronze retained.
Next, we switch to fixed income, through the M&G Optimal Income fund, managed by Richard Woolnough. The process combines Woolnough’s macroeconomic views with bottom-up credit recommendations from M&G's 30 strong credit analysts. The manager then allocates across the fixed income universe. The success of this fund saw assets swell and a tough couple of years ensued after 2014.
The short duration stance held back returns, but the fund’s performance picked up in late 2016. This was due to its lower duration in a rising bond yield environment and a timely addition to high yield and financials. All said, the combination of an experienced manager with a solid track record, ample resources, and a tried-and-tested strategy affirm our conviction through a Morningstar Analyst Rating of Silver.
Finally, the Schroder ISF Global Smaller Companies fund managed by Matthew Dobbs and Richard Sennitt. The duo relies on regional equity managers who are based in local markets for stock selection. There’s then combined input across this group of people, who decide on the portfolio’s overall regional allocation.
Sennitt and Dobbs are then responsible for ongoing monitoring and unintended biases. Holdings generally show strong earnings and cash flow growth prospects, in combination with a reasonable valuation. The strategy is typically less volatile than the benchmark and average peer, driven in part by its bias to quality companies. We’re not too enamoured with there being a performance fee on this fund, but it has positive attributes, which we feel should reward investors over the long haul and we’ve retained its Morningstar Analyst Rating of Bronze.
