Jonathan Miller: Welcome to the Morningstar Manager Check-up for an update on two UK equity funds and a global equity fund.
The Kames Ethical Equity fund has been run by Audrey Ryan since January 2000, with Ryan Smith responsible for the ethical screening. Companies excluded here are based on factors that include animal welfare, military or tobacco products, and environmental issues.
Ryan benefits from the support of a UK equity team that is well-resourced, using their stock research and thematic views when constructing the portfolio. Given the ethical constraints, she’s unable to invest in certain parts of the market and that means the fund has a bias to mid-caps, plus large sector deviations compared with the index.
Shorter-term performance has been affected by mid-caps generally struggling and some weakness in stock selection. Despite this, over Ryan's tenure the fund has still performed well ahead of the FTSE All-Share Index and the fund retains a Morningstar Analyst Rating of Bronze.
Trojan Income has been managed by Francis Brooke since 2004. The firm has roots in family wealth management, so the thinking of capital preservation along with long-term growth of capital and income are all at play here. Brooke constructs a relatively concentrated portfolio of quality companies that have to meet strict criteria before being considered for investment.
The focus is on FTSE 350 names, and he tends to maintain a far greater weighting in large caps than the category average. The focus on quality at the stock level also results in some clear biases at the sector level. Investors can therefore expect a performance profile that can at times look at odds with peers and the FTSE All Share Index. But over the long term, this is one of the most attractive funds in the sector on a risk/reward basis. There’s a lot to like and the fund holds a Morningstar Analyst Rating of Silver.
Finally, the Dodge & Cox Worldwide Global Stock fund is managed by a seven-person global equity investment committee, whose members average 24 years with the firm. The committee looks for stocks around the globe that appear cheap on a range of valuation measures. It relies on bottom-up, fundamental research and favours firms with good management, competitive advantages, and solid growth potential. A key trait is the strategy often takes advantage of bad news or a bad economic environment to buy fundamentally strong businesses.
As long-term investors, turnover is generally low and due to the patient, contrarian nature, the fund can at times lag. But the fund’s been consistent and outperformed in all rolling five-year periods since inception. Investors must be patient and willing to tolerate short-term adversity. But overall, we believe this fund remains an excellent long-term option in the global equity space. This means the fund maintains the top Morningstar Analyst Rating of Gold.
