Jonathan Miller: Welcome to the Morningstar manager check up for the latest updates from our fund research team.
The JPM Latin America equity fund has been run by Luis Carrillo for 15 years, with Sophie Bosch de Hood acting as co-manager since 2012. The approach targets attractively priced, quality growth companies that are assessed in two parts. First, a stock’s return potential is evaluated through four sources of return, resulting in a five-year expected return for the stock. Second, analysts assess business dynamics, management quality, growth prospects, sustainability of its competitive position, and corporate governance. The fund tends to have higher exposure in smaller-cap names compared with the index as the managers believe those companies have higher growth potential. Given the quality focus there’s a general underweighting to commodity cyclicals and the fund tends to do well in declining markets when quality comes to the fore. Despite a tricky 2016 we have confidence in the experienced team and proven strategy and the fund maintains its Morningstar Analyst Rating of Bronze.
Dean Tenerelli has been running European equity funds at T Rowe Price since 2005 and the Continental European fund was launched in 2009. He’s backed up by a sizable and strong analyst team of 18 that provides him with investment ideas and support. Tenerelli pursues companies with high-quality fundamentals, including superior profitability across the market cycle, a durable cash flow profile, and quality balance sheets. The outcome is an all-cap portfolio with fund's average market cap usually well below that of peers and the Index. There’s also a mix of value and growth stocks that come through the valuation work that takes place. We view this as a sound and distinctive growth discipline, providing ample upside potential without taking on extreme downside risk. We see general strengths here, as well as below average costs, which contribute to us reaffirming the Morningstar Analyst Rating of Bronze.
The M&G European Strategic Value fund has been run Richard Halle since launch in 2008. He designed this value-oriented strategy and is supported by two analysts. The process starts off with a strict quantitative screening process to identify stocks in the cheapest quartile within each sector, using price/book ratio as a measure. Financial strength, durability of the business model, and management behaviour are then analysed to avoid companies that are ultimately value traps. There’s then a fairly long-term investment horizon, with portfolio turnover typically standing at around 25%. Sector and stock diversification have generally offered a smooth ride to investors, and good stock picking skills have driven the long term outperformance. We’re keeping a close eye on a pretty large move into small and mid caps which is now a lot higher than peers. But overall we view the process as repeatable and the fund keeps its Morningstar Analyst Rating of Bronze.
