Jonathan Miller:Welcome to the Morningstar Manager Check-up for three fund updates from our analyst team.
David Dudding has managed the Threadneedle European Select fund since 2008 and his investment philosophy has remained unchanged. He targets firms exhibiting pricing power and high barriers to entry. The approach leads to a concentrated portfolio of sturdy-growth companies such as L’Oreal and Unilever. Portfolio construction is bottom-up with large latitude to deviate from the index.
This approach sits firmly in the quality growth camp so when we see cyclicals rally, this fund tends to miss out. But Dudding has demonstrated an ability to outperform in the long run with less volatility and better capital protection than peers when times are tough.
The portfolio's low turnover and focus on liquid, blue-chip stocks means we feel it can handle the 3 billion in assets. We believe Dudding is a proven manager who has put a distinctive investment strategy to good use and the fund retains its Morningstar Analyst Rating of Bronze.
The TR Property Investment Trust (TRY) has had Marcus Phayre-Mudge involved since the late 90s. He brings extensive knowledge of physical and listed real estate and is backed by dedicated analysts. The process has been honed over many years and gives us a high level of confidence. Ideas are garnered by more than 100 company visits each year, along with on-the-ground research to access Europe.
The team has built an extensive proprietary research database of more than 90 Pan-European real estate companies that account for pretty much all the index. Great importance is placed in assessing the underlying assets of all holdings to determine the see-through exposure and gearing of each position to individual sectors and markets. We hold the trust in very high regard and the modest inclusion of physical real estate provides a significant point of differentiation. We therefore reaffirm the Morningstar Analyst Rating of Silver.
F&C MM Navigator Distribution is led by Gary Potter and Robert Burdett, who have worked together since the early 1990s at various different companies. They’ve led this offering since 2007 and it’s got an experienced and stable team behind it. The duo’s main focus is on manager selection and providing competitive performance versus their IA Mixed Investment 20-60% shares peers. They aim to add value from asset-allocation decisions but tend not to take large bets relative to the sector.
Overall the equity portfolio has a value style bias and there’s a preference for income producing strategies. There’s around 20% in fixed income, then investment trusts are also held to provide alternative income strategies in an attempt to further diversify exposure. As a balanced allocation fund, we feel there’s a number of positives. Although given its multimanager structure, high fees are headwind, but we still maintain a Morningstar Analyst Rating of Bronze.
