Jonathan Miller: Welcome to the Morningstar Manager Check Up for three fund updates from our research team.
The First State Asian Growth fund is managed by Richard Jones and Alistair Thompson, who draw heavily on the wider investment of 20 people based in Hong Kong, Singapore, and Edinburgh. Alongside an impressive team is a process that’s been consistently executed over time.
The team seeks compound growers operating in industries with barriers to entry and limited regulatory oversight, with the ability to deliver strong and stable returns on capital. They also focus on strong management teams that act with integrity, are long-term-oriented, and have strong capital-allocation records.
There’s been a longstanding underweight to China and Tech which impacted performance over the last couple of years, but there’s been a return to from year to date with the fund around the top of its category. Overall, the strategy’s predictable return profile and time-tested approach inspire confidence in its ability to outperform over a cycle and the fund continues to merit its Morningstar Analyst Rating of Silver.
The PIMCO GIS Global High Yield fund is led by Andrew Jessop who focuses on the higher-quality end of the high-yield spectrum. He applies a straightforward and risk-aware process that draws on the firm’s deep analyst bench.
The success of the fund depends as much on what it looks to avoid, as it does on the team’s ability to uncover mispriced bonds. For example, a few years ago when the energy sector was going through some troubles, Jessop had already reduced exposure in the build-up, helping to shield returns during a difficult period.
The fund’s conservative profile under his tenure explains its tendency to protect during credit market woes and lag during rallies. Its compelling risk-adjusted returns and strong outperformance versus similarly conservative funds are positives in our mind and the fund retains its Morningstar Analyst Rating of Silver.
The Schroder QEP Global Core Equity fund has an experienced and longstanding manager in Justin Abercrombie, who has successfully run it since September 2001 using a quantitative model he developed. He also has the support of 15 quant specialists.
The model is focused purely on valuations and quality, rather than being trend-following and momentum driven. Ultimately, the philosophy is based on combining fundamental data and well-researched behavioural insights.
There’s then also considerable emphasis on portfolio construction and diversification of risk. What we’ve found is the quality aspect has helped during several down periods, reflecting consistency of the approach. With attractive fees and a steady proposition, we’ve reaffirmed the fund’s Morningstar Analyst Rating of Bronze.
