New Ratings
Franklin Technology – Neutral
Fatima Khizou
We have initiated coverage of Franklin Technology with a Morningstar Analyst Rating of Neutral. J.P Scandalios had been sole manager on this fund from December 2003 until June 2016, when he was joined by comanagers James Cross and Jonathan Curtis. In the past two-plus years, he has been stepping back as a result of his additional portfolio management responsibilities on the Franklin Small-Mid Cap Growth strategy.
As of September 2018, the day-to-day portfolio management responsibilities have been held by Curtis. With the support of an experienced bench of analysts, he continues to use the same successful approach as his predecessor.
While Curtis boasts long experience in the sector, this is his first-time running money. The fund’s Neutral rating reflects this lack of portfolio management experience and the lack of evidence in Curtis’ ability to successfully implement the strategy.
MFS Meridien US Concentrated Growth – Bronze
Jeffrey Schumacher
We initiate coverage on MFS Meridian US Concentrated Growth with a Morningstar Analyst Rating of Bronze. The fund benefits from the experience of lead manager Jeff Constantino and the deep bench of analysts at his disposal. The fund applies a sound philosophy and process that are built around quality, long-term growth, and valuation.
The concentrated 30-40 stock portfolio consists of blue-chip companies, and the strategy typically performs well in down markets while it tends to lag during strong rallies. The performance under Constantino has been uneven, partly because of its moderate growth profile, but returns were also hindered by its high fees.
T. Rowe Price Japanese Equity – Bronze
Ronald Van Genderen
We initiate our coverage on T. Rowe Price Japanese Equity, both the UCITS and OEIC vehicles, with a Morningstar Analyst Rating of Bronze, the same as Bronze-rated and US-domiciled T. Rowe Price Japan. Lead portfolio manager Archibald Ciganer took over the management of this strategy in December 2013. Since then, he has increased the focus on quality and moved the portfolio further down the market-cap scale.
Although this is his first role as portfolio manager, he has solid experience in Japanese equities and benefits from considerable analytical support in the form of the group’s Global Equity Research Team, which includes seven analysts who are covering Japanese equities. While we appreciate the experience that most of these analysts bring to the table, we also note that turnover has been higher than we would like to see.
Ciganer is applying a research-driven, bottom-up approach that looks for companies that deliver growth in shareholder value and where this growth is mispriced by the market. The strategy has performed well since Ciganer took over, outperforming the Japan large-cap equity Morningstar Category average and its Topix benchmark. Finally, the funds are reasonably priced.
Upgrades
Robeco European High Yield Bonds – Silver
Jeroen Siecker
Robeco European High Yield Bonds benefits from a stable and experienced manager duo. Roeland Moraal and Sander Bus have been working together on this fund since its inception and have executed the strategy's prudent approach well. On top of that, the fund is attractively priced within its Morningstar Category. We upgrade the fund to a Morningstar Analyst Rating of Silver.
