New Ratings
Investec GSF Global Multi Asset Income – Bronze
Barbara Claus
We have initiated the coverage with a Morningstar Analyst Rating of Bronze. While the history of this strategy since its launch in May 2013 is not the longest, we like its well-structured investment process, executed by a solid management team. Investec’s above average stewardship and below-average fees are additional positives.
Downgrades
LF Miton Cautious Multi Asset – Neutral
LF Miton Defensive Multi Asset – Neutral
Rajesh Yadav
While we appreciate that the Miton Multi-Asset range is managed by seasoned managers who have worked together for a long time, we find there is a lack of visibility on how their overall macro thinking translates into the sizing of individual themes, their evolution over time, and regional and sector exposure. We find this is especially important as the thematic view is deemed to drive the bulk of performance across the range. As result, our view has been tempered somewhat. We therefore lower the Morningstar Analyst Ratings for both funds from Bronze to Neutral.
M&G (Lux) European Strategic Value – Bronze
Mathieu Caquineau
M&G (Lux) European Strategic Value has been assigned a Morningstar Analyst Rating of Bronze. The fund was previously rated Silver before it was placed Under Review following the announcement of a series of changes in portfolio management responsibilities affecting Richard Halle, who has been the lead manager of this strategy since launch in 2008. Halle has taken over two funds, Neutral-rated M&G Pan European Dividend and M&G European Select, and is now also one of three co-managers at M&G Global Recovery, a global equity fund. While these three portfolios are currently very different from European Strategic Value’s, Halle plans to bring them in line with his value approach. Nonetheless, it represents an extra workload for Halle, especially because he does a lot of research himself. He expects to increasingly use M&G’s global sector analyst team of 10. This team has been rebuilt and reinforced since 2014, but it is still a work-in-progress. We are therefore less convinced of this strategy’s potential than before.
M&G (Lux) Pan European Dividend – Neutral
Jeffrey Schumacher
We are reinitiating coverage on M&G (Lux) Pan European Dividend with a Morningstar Analyst Rating of Neutral, which was a Bronze rating before we put the fund Under Review when major revisions to its investment team and process were announced. Phil Cliff has relinquished portfolio management duties as of July 2019 and was replaced by Richard Halle. With the arrival of Halle, the fund is the hands of an experienced and skilled stock-picker, whose workload has increased somewhat when he took on management responsibilities on this fund and two other strategies, next to managing the Bronze-rated M&G (Lux) European Strategic Value fund.
It is reassuring that the funds are expected to have a large overlap in style and holdings. With Halle at the helm, investors can prepare for a style change. We expect to see a transformation as Halle will likely manage the fund with a stronger emphasis on value and less exposure to quality stocks as opposed to the more quality growth-oriented approach under Cliff. As the design of the process is not fully crystallised yet and must prove itself in a dividend mandate, we remain on the conservative side.
