Holly Black: Welcome to Morningstar. I'm Holly Black with me is Samiya Jmili. She's an analyst at Morningstar. Hello.
Samiya Jmili: Hello, Holly. Thanks for having me.
Black: So you've been working on the Morningstar Fund Family 100 report. What is this report?
Jmili: So the Fund Family 100 is a bi-annual report in which we compare across Europe, the largest 100 investment management firms by asset under management. We rank those firms based on different criteria, including manager retention and tenure, the quality of their fund range in terms of Morningstar Analyst Ratings, and Morningstar Sustainability Ratings, as well as the specifics of their cross European fund lineup, such as the split between different asset classes, passive and active management, and finally their fee policies.
Black: Okay, so when you're looking all of that, what were some of the key findings this time round?
Jmili: Well, for each of the reviewed criteria, the top 10 firms were diverse as local boutiques and specialized asset managers carved out a place for themselves alongside major global players. Out of the top 100 asset managers who were reviewed 63 are rated qualitatively by our manager research. Four of those received high parent rating, 18 scored above average, 39 landed averages and 2 earned below average ratings. The firms which are positively regarded by our manager research fared well in most examined areas, often ranking in the first or second quartile of the list. However, for sustainability related rankings, those parents rated high or above average did not necessarily have a high share of funds with better sustainability ratings, showing that not all higher quality asset managers have yet fully embraced sustainability throughout their fund range.
Black: Okay, so if we think about the Morningstar Analyst Ratings, that's where our analysts assign Gold, Silver or Bronze. What are some of the most highly rated fund families?
Jmili: Well, when we look at the percentage of share classes earning a Bronze, Silver or Gold Morningstar analyst rating, two firms standout. The first one is Fundsmith, which is a good example of an investment boutique that strives to achieve investment excellence. The firm offers three strategies with reasonable fees where key personnel are heavily invested, making them well aligned with investors’ interest. The second is Vanguard with almost 75% of medalist share classes. Vanguard embodies at a larger scale, investor friendly practices through its responsible fund capacity management and low cost fees. Also considering both the length of manager tenure and the level of transparency in disclosing portfolio managers names, no other asset managers does better than Comgest according to our data. It is the most transparent firm and it boasts an average manager tenure of 8.7 years, a low turnover that stems from the firm's collegial decision making culture, partnership structure and long term oriented investment policy.
Black: Okay, so another rating that Morningstar uses quite a lot is the sustainability rating and that tells us how well some firms are taking into account ESG factors. So what are some of the most sustainable fund families according to the research?
Jmili: Based on the percentage of funds in their lineup, which have a high or above average sustainability ratings, Comgest and MFS stack up well against some of the best ESG oriented Nordic firms, with respectively 52% and 40%, of funds, earning four or five globes MFS lineup is interesting in that it displays less ESG related risks than most peers despite having relatively small portion of funds with a sustainability mandate. Focusing on higher quality franchises and sustainable earning growth in many of its equity funds resulted in the firm’s portfolios having a tilt towards highly sustainable companies.
Black: Samiya, thank you so much for your time. From Morningstar, I'm Holly Black.
