Upgrades
PIMCO GIS Emerging Local Bond – Bronze
Jeroen Siecker
We initiate the coverage on PIMCO GIS Emerging Local Bond Fund with a Morningstar Analyst Rating of Bronze. Despite some manager shuffling in 2011 and 2014, PIMCO has made a handful of experienced hires in recent years and has a large squad of dedicated emerging-markets analysts backing this strategy. Michael Gomez has run this fund since its December 2006 launch. Its management team fundamental analysis aims to find relative value opportunities from a currency, country, interest-rate, and yield-curve perspective, in addition to opportunities between cash bonds and derivatives, which are used abundantly.
Robeco QI European Conservative Equities – Silver
Ronald Van Genderen
Increased conviction in the approach that underpins this strategy drives a Morningstar Analyst Rating upgrade to Silver from Bronze. The strategy uses an entirely quantitative-based approach, an area where Robeco has extensive experience and has invested heavily in human resources over the years.
The team that runs this fund is led by Pim van Vliet, whose academic work the model is based on. He is joined by five other comanagers who all invest in the strategy, as well as a stable group of 10 quant researchers.
The time-tested quant model mainly seeks low-risk stocks, as measured by their volatility and distress metrics, but valuation and momentum factors are also incorporated. We have increased our conviction in this approach as we think this process to be highly disciplined and repeatable, and we value that the team has consistently enhanced the model over time.
The strategy has a predictable return profile, tending to lag during strong market rallies and lead in volatile environments, and sports attractive fees, which give it a built-in advantage over peers. All told, this strategy’s many strengths position it to be a long-term winner.
T. Rowe Price Global Growth Equity – Silver
Ronald Van Genderen
We have upgraded the Morningstar Analyst Rating for T. Rowe Price Global Growth Equity to Silver from Bronze. The top-notch leadership of this strategy and their skilful utilisation of a very strong analyst team has increased our conviction in T. Rowe Price Global Growth Equity. Scott Berg is the portfolio manager here and displays remarkable knowledge of both stocks and macroeconomic issues. He is suitably experienced, having 16 years in markets, all of them at T. Rowe Price.
Key-person risk is reduced by the presence of assistant portfolio manager Hari Balkrishna, who joined Berg in 2015 and similarly shows off vast investment insights. But it’s their ability to leverage an enormous team of equity analysts globally that really sets them above most teams we cover. It has a portfolio of around 160 stocks, making diversification the key risk-management tool here. The growth process is well established, Berg has used it since 2008 managing this strategy.
He is cognisant of country dynamics that can support an investment decision and investors should note the large emerging-markets exposure, which can increase volatility in the wrong hands, is not the case here. There is much going right here. The portfolio management and research are top draw, while the risk management in constructing this growth portfolio is very clever. T Rowe Price enters an elite class in 2019.
