New Ratings
JPMorgan Global Income Conservative – Neutral
William Chow
JPMorgan Global Income Conservative was launched in October 2016 as a lower risk variant of the Luxembourg-domiciled JPMorgan’s Global Income strategy, which has a history dating back to 2008 and benefited from the leadership of Michael Schoenhaut, who has managed JPMorgan’s global suite of multi-asset income since its creation in 2007. The strategy sports a well-structured process, which utilises both top-down and bottom-up research to establish asset allocation views crucial for the strategy’s flexible mandate with an income focus. Despite our confidence in Schoenhaut, continued personnel turnovers, manager reshuffles have had an impact on the strategy underlying sleeves, leading to a Morningstar Analyst Rating of Neutral for all share classes.
Upgrades
Amundi IS MSCI Europe Quality ETF – Silver from Bronze
Dimitar Boyadzhiev
Amundi IS MSCI Europe Quality Factor ETF is a solid choice for investing in high-quality European companies. This exchange-traded fund targets large- and mid-cap European stocks with the highest profitability (measured by return on equity), strongest balance sheets, and most-consistent earnings growth. These stocks often carry above-average valuations, and because the fund does not impose a valuation discipline, it tends to exhibit a growth tilt relative to its parent, the MSCI Europe Index. Over the long term, this ETF's low cost of 0.23% gives it an edge over its active peers in the Europe large-cap growth Morningstar Category. Because of its solid fee advantage, combined with a robust process for targeting quality companies and diversification, we have upgraded this fund to a Morningstar Analyst Rating of Silver from Bronze.
iShares € High Yield Bond ETF (HIGH) - Bronze from Neutral
Jose Garcia Zarate
This is a useful instrument to quickly lock in positions in the most liquid segment of EUR-denominated high yield market, while its significant cost advantage relative to active peers in the category is bound to support returns over the long-term. This remains an asset class where experienced active managers can add value over a standard index-tracking mandate. But this strategy’s low fee provides a nice tailwind at all times. On this account, its Morningstar Analyst Rating has been upgraded from Neutral to Bronze.
Downgrades
Brunner Ord (BUT) – Neutral from Bronze
Bhavik Parekh In May 2020, Allianz GI announced that effective immediately Lucy Macdonald had stepped down as manager of Brunner Investment Trust. Macdonald was replaced by Matthew Tillet, deputy on the strategy since 2016. This change came as a result of restructuring by Allianz GI and includes the merging of the European and global equity teams, the latter being a key input to the strategy. The loss of lead global equities portfolio management experience resulting from Macdonald’s departure reduces our conviction here. While there is continuity with Tillet, his expertise lies in the UK and the two new deputy managers do not have individual track records of their own. Furthermore, changes to the supporting team create additional uncertainty. The Morningstar Analyst Rating for the trust is downgraded to Neutral from Bronze.
JOHCM UK Growth – Neutral from Silver
Samuel Meakin
Persistent outflows over 2019 and into 2020 have significantly reduced the fund’s size, such that the ownership concentration among the largest remaining investors is now substantial. While the outflows have been handled effectively so far, the significant allocation to less-liquid small- and micro-cap stocks could make it more difficult to maintain the overall shape of the portfolio in the event of further redemptions by larger fundholders. The Morningstar Analyst Ratings for all (unhedged) share classes are therefore moved to Neutral from Silver.
Kames Ethical Cautious Managed – Neutral from Bronze
Rajesh Yadav
While we appreciate that Kames Ethical Cautious Managed strategy is managed by seasoned managers who have worked together for a long time, and have executed well on this dark green ethical strategy, our conviction on People continues to be held back owing to unsettling turnover in the UK equity and fixed-income teams over the past couple of years. As we maintain our current People Pillar rating, it means that under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance expectations, the Morningstar Analyst Rating for the fund is lowered to Neutral from Bronze.
Note: under the Morningstar methodology different share classes of funds may have different ratings
