Jonathan Miller: Welcome to the Morningstar Manager Check-up for fund updates from our research team.
Richard Pease has run the FP Crux European Special Situations fund since 2009, but his experience in European equities goes back nearly thirty years. Over this time he‘s demonstrated strong stock-picking skills, using a disciplined process that’s predominantly bottom-up. Stock selection is driven by four key factors: the company's business, its management, its financials, and its valuation.
The fund is largely unconstrained, with a leaning towards mid-caps and differs notably from the competition. Despite this, the fund has remained less volatile than most of its peers over various time periods and the manager has skilfully made those bets pay, with the fund outperforming over his tenure. We think highly of Pease: his experience, consistency and proven ability make this an attractive offering. There is key man risk here and that makes us maintain the fund’s Morningstar Analyst Rating of Bronze.
Next is the Templeton Global Bond fund which has been managed by Michael Hasenstab since 2001. Along with a co-manager and six analysts, as well as trading and risk teams, we feel the strategy is well-resourced. The portfolio is based on the team’s meticulous fundamental sovereign and currency research. Given the contrarian mindset, opportunities have been focused on emerging-markets countries, where better fiscal prospects are seen.
The fund also stands out from the crowd due to its long-time bets against the yen and euro, as well as its protection for rising interest rates. While at times those macro themes have worked against the fund, they’ve also provided some much-needed insulation when we’ve seen dollar strength and interest rate hikes in the US. There’s a need to stomach volatility in this distinctive approach but investors have been rewarded over the long term. We therefore maintain our Morningstar Analyst Rating of Silver.
Finally, Robeco Emerging Markets Equities, which has been led by Wim-Hein Pals since 2000. He leads a stable team of 11, organised along a mix of sector and country lines. In our view the approach effectively combines top-down country allocation and bottom-up stock selection. Five factors are considered at this stage: macro environment and political risk, earnings expectations, valuation, technical analysis, and sentiment.
Valuations are central to the analysis which gives the fund a slight value bias. What you also see is around 90 holdings, diversified across sectors and geographies. The team’s been more right than wrong with its country calls in the long run, and stock-picking has generally been solid. With an experienced leader, well-grounded team, and robust process, the fund holds a Morningstar Analyst Rating of Silver.
