Jonathan Miller: Welcome to Morningstar’s Manager Check-up for ratings updates from our fund analyst team.
Fund managers James Syme and Paul Wimborne joined JO Hambro in May 2011, to launch the Global Emerging Market Opportunities fund, having previously been at Baring Asset Management. Unlike many peers, the approach is driven by top-down analysis of the 23 countries making up the MSCI Emerging Market index.
Their framework produces an overall score for each country, as well as views on the attractiveness of various characteristics. These views then focus their stock selection efforts. The defining characteristic of the portfolio is a top-down allocation, which can be quite aggressive at both the country and sector level.
The managers are around 10% overweight in India, where they see a strong trend growth rate as well as the potential for a cyclical recovery. While macro calls can be difficult to get right all the time, the managers have been consistent in delivering superior long-term performance across most time frames. The fund therefore maintains a Bronze rating.
Robeco has a long history in quantitative investment, and the Robeco QI Global Conservatives Equities fund is a low-risk strategy led by Pim van Vliet. The time-tested, proprietary quant model mainly seeks low-risk stocks as measured by their volatility and distress metrics, but valuation and momentum factors are taken into account.
We like the fact the fund goes beyond a standard low-volatility approach as it helps curb the risks of investing in stocks with excessive valuation. For example some low-volatility consumer staples names have seen their exposure constrained for this very reason in recent years.
Recent market conditions have not favoured this defensive fund as high-beta stocks have generally led the market rally. But we’re still convinced of the fund’s merits, which include particularly attractive fees and it retains its Morningstar Analyst Rating of Bronze.
The Stewart Investors Asia Pacific Sustainability fund has been run by David Gait since 2005, with Sashi Reddy becoming co-manager in 2011. The approach builds on the house style, which targets high-quality companies that offer predictable earnings growth, but emphasises names that are able to benefit from the sustainable development of countries in which they operate. This results in a long term, low-turnover approach.
The portfolio will often have a high active and a performance profile that can differ significantly from its peers. It typically loses less than peers in down markets, although it can lag in cyclical rallies. Recent performance emphasises this point to a degree, where last year, returns were affected by the lack of exposure to China and tech companies.
We continue to have faith in the consistently applied investment process and in the experienced management team, so we reaffirm the Morningstar Analyst Rating of Silver.
