Lena Tsymbaluk: Welcome to the Morningstar Manager Check-up for fund updates from our analyst team.
Investec Asian Equity has been managed by Greg Kuhnert since 2005. He uses the group’s trademark process, based on the "4Factor model", which is a proprietary quant screen. We have a high opinion of the 4Factor process and the manager has executed it to great effect in Asia. The model assesses value, quality, earnings momentum, and share-price momentum. The process does, however, experience some of the challenges of quant processes, such as struggling at inflection points. Nevertheless, the manager has been able to successfully implement the process, which has led to strong risk-adjusted returns over the long term. The strategy reopened in 2017 after being soft-closed for a number of years. This was due to some outflows, the change of the market structure, as well as markets increasing in value. The fund retains its Morningstar Analyst Rating of Silver.
Fidelity America is a solid US large-cap value fund. It has many positives, including a talented manager, Angel Agudo, a well-resourced analyst team, and a disciplined process. The process was brought by Agudo upon his arrival, investing in undervalued companies – those that have gone through a period of underperformance, with little value ascribed to their recovery potential. Investors should however be aware that the fund’s performance can be lumpy given the unconstrained nature. For example, the fund significantly underperformed against S&P 500 in 2017, given the striking outperformance of growth and momentum factors, while the value style was out of favour. In addition, FAANGs (Facebook, Amazon, Apple, Netflix and Google) were the top performing stocks and the fund doesn’t tend to invest in those. That said, the fund’s rigorous investment approach and attention to risk management make this fund a solid proposition. It retains its Morningstar Analyst Rating of Bronze.
Jupiter India is managed by Avinash Vazirani. The manager has over 20 years of experience investing in Indian equities and has managed the fund since its inception in 2008. The approach can be best described as GARP – growth-at-a-reasonable-price. The manager tries to identify under-researched stocks with strong growth prospects. The approach has led the manager to favour mid- and small-cap names over benchmark heavyweights. Investors should be aware, however, that given the unconstrained portfolio and a large exposure to smaller-cap names, the fund can go through short periods of underperformance, especially when small caps fall out of favour, such as 2013 and the year-to-date. Given the experienced manager and the research-intensive process the fund retains a Morningstar Analyst Rating of Bronze.
