Jonathan Miller: Welcome to the Morningstar Manager Check-Up for three fund updates from our research team.
Fidelity Asian Smaller Companies has been run by Nitin Bajaj since September 2013. His style is focused on stock specifics, so he pays little attention to the benchmark. Small caps are very under-researched in Asia and Bajaj makes good use of Fidelity’s vast analyst resource in the region. At heart, his process involves identifying well-run companies in attractive industries at appealing valuations. A principal criterion here is preservation of capital, so Bajaj will focus on buying businesses where he feels there is a significant margin of safety in the price. The investment approach is disciplined and differentiated within the peer group. Whilst it’s still relatively early in Bajaj’s tenure, we feel that investors are in the hands of an adept up and coming manager, and we reiterate our Morningstar Analyst Rating of Bronze.
Next, is the Royal London Sustainable Leaders fund which has been managed by Mike Fox since November 2003. Given the mandate, there’s limited exposure to sectors such as energy and basic materials, meaning returns can at times deviate from the market and peers. Fox looks to identify businesses where he believes the longer-term growth prospects are underappreciated by the market, and the fund exhibits a growth bias relative to the index and peers. Notable overweights in the portfolio are healthcare and technology, where he’s been using his overseas allowance to hold the likes of Amazon, Microsoft and Alphabet. We believe the process is disciplined and has been well executed over Fox’s tenure, so the fund retains its Morningstar Analyst Rating of Bronze.
Finally, Schroder Asian Income, which is managed by Richard Sennitt who has more than 20 years’ experience in the region. The approach here relies predominantly on bottom-up stock selection, with Sennitt looking for quality names, which are financially sound and profitable, with proven management. Ideas are generated internally via the in-house analysts based in Asia, company visits and an internal screening model. The analysts grade stocks based on their convictions, which then helps Sennitt build the portfolio. Overall, we have high conviction in Sennitt’s ability to effectively use analyst resources and execute the strategy to good effect, as shown by strong and consistent outperformance. We like the consistency here, which serves to reaffirm the Morningstar Analyst Rating of Silver.
