New Ratings
RobecoSAM Sustainable Water – Neutral
Ronald Van Genderen
We initiate coverage on the fund with a Morningstar Analyst Rating of Neutral. RobecoSAM Sustainable Water is one of the oldest water funds available. Dieter Küffer joined RobecoSAM in 2001 and has been managing this fund, in which he has been personally invested from the start, since its inception at the end of September 2001. We value his long tenure at this fund, as it has brought continuity at the management level.
Nevertheless, we have some concerns regarding Küffer’s workload and the high and persistent turnover in RobecoSAM’s analyst teams. Overall, Küffer implements a strong process, but the changes made to the portfolio as of 2012 and the reversal of these changes in recent years are cause for some reservations.
These changes to the portfolio came on the back of poor performance in 2010 and 2011. The measures taken have stabilised relative performance. Over his tenure, Küffer has outperformed the equity water Morningstar Category sector but not the thematically relevant S&P Global Water Index. Finally, the above-average cost level of the fund keeps us from gaining conviction in it.
Funds Placed Under Review
AXA WF Framlington Global Convertible Bond
Mara Dobrescu
AXA IM has announced that the lead portfolio manager of AXA WF Framlington Global Convertible Bond, Marc Basselier, is leaving the firm effective 1 Dec 2018. Basselier will join rival firm Union Banque Privée as head of convertible bonds.
Basselier has two decades of investment experience; he built a strong track record on a European convertible-bond fund at AXA IM from 2002 to 2010 before launching this fund in 2010. His experience was a key driver of our conviction in the fund, given the fact that the resources dedicated to convertible bonds at AXA IM are slim and have been unstable over the past five years. Two of Basselier’s former comanagers moved to different roles in the organization in 2016.
Only one of them was replaced, as Alexandre Fade, who has nine years of experience and previously worked as a portfolio engineer at the firm, was promoted to backup manager of this fund in 2016. Despite these limited resources, Basselier had so far successfully been able to leverage insights from AXA Framlington’s broader equity team, which made sense given the process’ focus on underlying equity drivers.
After Basselier’s departure, the fund will be managed by Alexandre Fade and David Shaw. Shaw joined AXA IM in 2016 as a North American equity specialist and deputy manager of AXA Framlington American Growth. He had so far been involved in sourcing US ideas for this global convertible bond portfolio, although he was not formally a comanager.
While the new portfolio manager duo can continue to rely on AXA Framlington’s group of five experienced global equity experts, as well as four additional regional equity managers, we are concerned by the lack of specific convertibles experience in the fund’s management team.
We are placing the fund’s Morningstar Analyst Rating Under Review whilst we assess the full impact of these changes.
Re-affirmed Rating
JP Morgan Global Corporate Bond Fund – Bronze
Louise Babin
A change in responsibilities has taken place on the team, with Jeremy Klein no longer involved in the strategy. Klein has a background in US credit and is a portfolio manager in that space, which extended to being named on this fund. He worked alongside Lorenzo Napolitano here but had less day-to-day involvement than Napolitano. Napolitano remains in place, as do the three other managers: Lisa Coleman, Usman Naeem, and Andreas Michalitsiano.
Coleman leads the team, bringing considerable experience, and has been in place since inception of the strategy. It is worth noting that Klein had also been involved since the start, while the other managers formally took on their responsibilities in 2015.
Klein is not being replaced, but, with Coleman’s continued oversight, as well as the other portfolio managers and depth of resources in the JP Morgan investment-grade team, we feel this is not material enough to warrant reassessing the fund’s Morningstar Analyst Rating. As a result, the fund continues to hold a Morningstar Analyst Rating of Bronze.
