Upgrades
Fidelity Asian Smaller Companies – Silver
Bhavik Parekh
We continue to view Fidelity Asian Smaller Companies in a positive light, based on the disciplined implementation of the investment process by experienced portfolio manager Nitin Bajaj, and the resources available to him through Fidelity’s large pool of analysts. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the clean Y share class is upgraded to Silver from Bronze. Other share classes range between Silver and Bronze.
iShares Index Linked Gilt Index Fund (UK) – Bronze
Jose Garcia Zarate
The intrinsic high duration of the market of UK inflation-linked government bonds can make a passive approach fall short in some phases of the cycle. However, this is a classic buy-and-hold exposure in UK-centric portfolios, and so the compounding benefits of low fees add up over the long-term. This is the key reason that supports an upgrade for the clean share class (D) of this index fund from Neutral to Bronze.
Robeco QI European Conservative Equities – Gold
Ronald Van Genderen
Robeco QI European Conservative Equities’ talented team, well-defined process, and reliable performance pattern make it an appealing offering for investors. Our conviction in the team and process has not changed, with People receiving a pillar rating of Above Average and Process receiving High. However, under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Ratings for its cheapest share classes, including the clean C share class, increase to Gold from Silver, while more expensive classes land at Silver.
Downgrades
Franklin UK Mid Cap – Bronze
Samuel Meakin
Incumbent lead manager Paul Spencer is set to retire from the industry later in 2020, with Richard Bullas assuming the role following a transition period that is currently in progress. Spencer and Bullas have worked closely together for a number of years--they took over the UK Smaller Companies strategy in 2012, successfully overhauling the approach to one more akin to that used on this product. Over time, Spencer became less hands on as his primary focus was on this UK mid-cap strategy, with Bullas taking day-to-day charge on small caps. The investment approach and its implementation remained stable throughout the transition on the small-cap strategy, and we expect similar this time around.
Bullas is well versed in the teamwide approach, having joined the team in 2000 and having managed the smallcap strategy since 2012. Spencer’s upcoming retirement will clearly represent a loss in terms of his significant experience and knowledge in the space. However, we retain conviction in the team given Bullas’s relevant prior experience, his working relationship with Spencer, and the support of the wider, close-knit UK desk. As a result, we continue to view the strategy’s prospects in a positive light, but with a slightly lower level of conviction. All share classes therefore earn a Morningstar Analyst Rating of Bronze (previously Silver).
Absolute Insight Equity Market – Neutral
Fatima Khizou
The recent changes to the overall investment team, combined with implementation issues, have lowered our conviction in this strategy. The Morningstar Analyst Rating for the B3p GBP share class is therefore downgraded to Neutral from Bronze. All other share classes are also now rated Neutral.
BNY Mellon Absolute Return Equity – Neutral
Fatima Khizou
The recent changes to the overall investment team, combined with implementation issues, have lowered our conviction in this strategy. The Morningstar Analyst Rating for the GBP S Acc share class is therefore downgraded to Neutral from Bronze. All other share classes are also now rated Neutral.