Upgrades
PIMCO GIS Global High Yield Bond – Silver
Niels Faassen
Prudence is the watchword here. Lead manager Andrew Jessop keeps this fund focused on the higher-quality end of the high-yield spectrum. While the fund has delivered compelling risk-adjusted returns under Jessop’s watch, its conservative profile explains much of its peer-relative performance: a tendency to protect during credit market downdrafts and lag during rallies. PIMCO High Yield’s experienced management team, led by Jessop, plies a straightforward and risk-aware process. The firm’s deep analyst bench further supports our increased conviction in the fund.
Downgrades
GAM UK Diversified – Neutral
Simon Dorricott
The longstanding manager of this fund, Andrew Green, is stepping back at the end of the year and passing management responsibility to Chris Morrison and new recruit Adrian Gosden. The two will be working together as co-managers using a process similar to that used by Gosden when he worked with Adrian Frost at Artemis and also reflecting the fundamental work that Morrison has been conducting for this fund since he joined the team in 2011.
Although they are co-managers, it seems that Morrison will have more say on which ‘buy rated’ stocks are held in this fund and on weightings. The reliance on fundamental research and the lack of Green’s decision-making, which was largely based on technical analysis, shows a clear change of approach, despite the recovery/contrarian philosophy being set to stay. Given the forthcoming changes to decision-makers, investment process and resources, and the lack of a truly applicable track record from the new managers, we have decided to assign the fund a Morningstar Analyst Rating of Neutral.
Investec Asia ex Japan - Neutral
Simon Dorricott
From October 1, the group plans to move this fund from the 4Factor Asia team led by Greg Kuhnert, instead placing Charlie Dutton at the helm. Dutton is a relatively recent addition to the group, having joined in December 2016 from a small boutique, Coupland Cardiff. The approach Dutton intends to follow here will be very similar to that employed on the Global Franchise fund managed by the co-head of the team, Clyde Rossouw. Support is provided by the quality team within which Dutton sits; however, that is a global team with limited coverage of Asian stocks. Given the changes to the decision-maker, investment process and resources, and the lack of a truly relevant track record from the new manager, we have decided to assign the fund a Morningstar Analyst Rating of Neutral.
