Upgrades
Allianz Wachstum Euroland – Bronze from Neutral
Ronald Van Genderen
Changes that affected AllianzGI’s solid European Equity Growth team in recent years, including its merger with the Global Equity team in May 2020, still give us pause. Hence, the strategy retained its Average People Pillar rating. We think Andreas Hildebrand, who became lead-manager in 2017, has showed a solid execution of this well-defined and time-tested bottom-up approach. This drives an increase of the Process Pillar to Above Average from Average. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark relative performance, this drive an upgrade of the Morningstar Analyst Rating to Bronze from Neutral for the clean WT share class. More expensive share classes retain a Neutral rating.
Allianz Euroland Equity Growth – Bronze from Neutral
Ronald Van Genderen
Changes that affected AllianzGI’s solid European Equity Growth team in recent years, including its merger with the Global Equity team in May 2020, still give us pause. Hence, the strategy retained its Average People Pillar rating. We think Andreas Hildebrand, who became lead-manager in 2017, has showed a solid execution of this well-defined and time-tested bottom-up approach. This drives an increase of the Process Pillar to Above Average from Average. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark relative performance, this drive an upgrade of the Morningstar Analyst Rating to Bronze from Neutral for the cheapest share classes, including the clean WT share class. More expensive share classes retain a Neutral rating.
BGF European – Bronze from Neutral
Ronald Van Genderen
Talented manager Stefan Gries took over at the helm of this strategy from Nigel Bolton and Brian Hall in June 2019. He is part of and supported by BlackRock’s comprehensive Fundamental European Equity team, which forms a sound mix ranging from very experienced senior portfolio managers to graduates on rotation. However, we also have reservations on their workload and team changes in recent years. The swift and consistent way in which Gries has implemented his shareholder value focused approach, that he has been applying at BlackRock Continental European and the leverage on the team’s comprehensive research drives an increase of the Process Pillar rating from Average to Above Average. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark relative performance, the Morningstar Analyst Rating stands at Bronze for the cheaper share classes. This includes the clean D2 share class, which was rated Neutral before More expensive share classes receive a Neutral rating.
BGF European Focus – Bronze from Neutral
Ronald Van Genderen
Talented manager Stefan Gries took over at the helm of this strategy from Nigel Bolton and Simon Hunter in June 2019. He is part of and supported by BlackRock’s comprehensive Fundamental European Equity team, which forms a sound mix ranging from very experienced senior portfolio managers to graduates on rotation. However, we also have reservations on their workload and team changes in recent years. The swift and consistent way in which Gries has implemented his shareholder value focused approach, that he has been applying at BlackRock Continental European and the leverage on the team’s comprehensive research drives an increase of the Process Pillar rating from Average to Above Average. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark relative performance, the Morningstar Analyst Rating stands at Bronze for the cheaper share classes. This includes the clean D2 share class, which was rated Neutral before More expensive share classes receive a Neutral rating.
iShares € Corp Bond 1-5yr ETF – Silver from Bronze
Jose Garcia-Zarate
This is a compelling option for investors seeking targeted maturity exposure to the market of EUR corporate bonds. In most cases, maturity-segmented strategies will be used to adjust the duration of the credit bucket of the portfolio. From that perspective, the accuracy of duration metrics offered by a passive fund is a key positive. Additionally, investors also benefit from the compounding benefits of the strategy’s low fees. These features support an upgrade of the Morningstar Analyst Rating from Bronze to Silver.
zCapital Swiss Small & Mid Cap Fund – Gold from Silver
Natalia Wolfstetter
Our conviction in the team and process behind zCapital Swiss Small &Mid Cap remains strong, with both the People and Process Pillars receiving ratings of High. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for all share classes increases to Gold from Silver.
zCapital Swiss Dividend Fund – Gold from Silver
Natalia Wolfstetter
The experienced management team, thorough process, and attractive risk profile underpin our positive view on zCapital Swiss Dividend, with the People and Process Pillars receiving ratings of High and Above Average, respectively. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for all share classes increases to Gold from Silver.
Downgrades
Allianz Wachstum Europa – Neutral from Bronze
Ronald Van Genderen
Changes that affected AllianzGI’s solid European Equity Growth team in recent years, including its merger with the Global Equity team in May 2020, still give us pause. Hence, the strategy retained its Average People Pillar rating. We have also retained the Above Average Process Pillar rating, as it benefits from a well-defined and time-tested bottom-up approach. Under our enhanced ratings framework, which places a greater focus on fees and expected benchmark relative performance, the Morningstar Analyst Rating stands at Neutral for all share class, while it stood at Bronze before.
Bankers Ord (BNKR) – Bronze from Silver
Bhavik Parekh
Bankers remains a solid choice for investors seeking exposure to global equities with quarterly income, especially with experienced manager, Alex Crooke, continuing to lead it. However, while our conviction in the people and process have not changed, under our enhanced ratings framework, which places a greater emphasis on fees, the trust's Morningstar Analyst Rating is downgraded to Bronze from Silver because of non-management-fee costs reducing competitiveness.
Haris Associates Global Equity – Bronze from Silver
Jeffrey Schumacher
Harris Associates Global Equity's high-conviction approach retains appeal for gutsy investors, but a looming transition and high fees reduce its Morningstar Analyst Rating to Bronze and Neutral, depending on the share class, from Silver. Harris Associates has prepared for a transition in recent years. Clyde McGregor, 67, U.S. equity comanager here since 2003, plans to retire by age 70, and other accomplished senior investors at the firm, such as Oakmark’s Bill Nygren and Oakmark International’s David Herro, while not retiring soon, have ceded more responsibility to the next generation. The younger cohort here, Tony Coniaris on the U.S. side and non-U.S. team member Jason Long, are capable and steeped in the firm’s absolute value style. There’s a good chance they’ll carry out the fund’s approach as well as their predecessors, but no guarantee. This approaching transition reduces this fund’s People rating to Above Average from High.
Fidelity Emerging Markets (Lux-domiciled) – Bronze from Silver
Lena Tsymbaluk
Fidelity Emerging Markets boasts an experienced management team, substantial resources at their disposal, and an established approach highlighting Fidelity’s best emerging-markets ideas. Under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance expectations, the Morningstar Analyst Rating for the Y clean share class of the Lux-domiciled fund has been downgraded to Bronze from Silver. Other share classes range from Silver to Neutral.
T. Rowe Price Continental European Equity – Neutral from Silver
T. Rowe Price European Equity – Neutral from Silver
Samuel Meakin
With incumbent manager Dean Tenerelli leaving T. Rowe Price at the end of 2020, Tobias Mueller is set to take over on T. Rowe Price Continental European Equity and T. Rowe Price European Equity. The transition is slated to begin on July 1, when Mueller becomes comanager alongside Tenerelli. Mueller has a well-structured approach, which he also intends to implement here, in place on his existing mandate. While we have had positive experiences with T. Rowe as a house when it comes to manager changes, in this case, it has only been executed in practice for a relatively short time; we therefore exercise caution and continue to watch it develop. All share classes thus receive a Morningstar Analyst Rating of Neutral.
Note: under the Morningstar methodology different share classes of funds may have different ratings
