Upgrades
Merian UK Smaller Companies
Samuel Meakin
Nick Williamson has demonstrated diligent execution of the approach since taking over this strategy in January 2016, and he is backed by an experienced and well-resourced team. Under our enhanced ratings framework, which places a greater emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the R share class is upgraded to Silver from Bronze. Other share classes range from Silver to Bronze, dependent on cost.
BGF Asian Tiger Bond
Patrick Ge
BGF Asian Tiger Bond is guided by impressive leadership and employs a well-executed team-based approach, making it a solid option for investors seeking hard-currency Asia credit exposure. The strategy benefits from final decision-maker Neeraj Seth, who is one our favourite Asian credit managers. He sets the macro direction and risk budget, while comanagers Ronie Ganguly and Artur Piasecki oversee credit selection on a day-to-day basis.
Our confidence in the comanagers, who were added in late 2018, has grown as they have eased into their roles. Furthermore, they have a large supporting cast of experienced fixed-income investors. The strategy’s consistent team-based approach, which combines top-down and bottom-up analysis, has translated to peer-beating long-term results. As a result, we have reiterated our Above Average views on the People and Process Pillars. Under our enhanced ratings framework, which puts more emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the clean share class D2 is upgraded to Silver from Bronze. The more expensive share classes fall to Neutral.
Downgrades
Artemis High Income
Evangelia Gkeka
Artemis High Income is managed by Alex Ralph, who is supported by James Foster on the investment grade side and Chris Ellis on high yield, quantitative screening, and bottom-up analysis. The fixed income side (minimum 80%) employs a largely bottom-up approach, looking for issuers offering high yields but with a high probability of meeting their coupon and principal payments as well. The strategy can also allocate up to 20% in equities. Allocation here is driven mainly by the relative attractiveness of cash flow yields offered by equities against the bond portfolio. The People and Process Pillars retain their Above Average score driven by the experienced portfolio management team and the effective implementation of the bottom-up investment process over the long term respectively. Under our enhanced ratings framework the Morningstar Analyst Rating for the strategy’s clean share class (I) is lowered to Bronze from Silver. More expensive share classes are rated Neutral.
MS INVF Euro Corporate Bond
Evangelia Gkeka
MS INVF Euro Corporate Bond is managed by the experienced management team of Richard Ford, Leon Grenyer and Dipen Patel. The managers employ a disciplined investment process that combines topdown macroeconomic analysis with in-depth bottom-up value-focused credit research. The team’s macroeconomic outlook determines the strategy’s desired level of interest-rate and credit risk, as well as sector exposures, while the analysts provide detailed issuer-level analysis, taking fundamentals, valuation, and bond structure into consideration. We believe the quality of this analysis and the managers’ active management style combine well together, and we therefore retain our Above Average People and Process Pillar ratings. Under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance, the Morningstar Analyst Rating for the strategy’s clean share class (Z) is lowered to Neutral from Bronze. More expensive share classes are rated Negative, while cheaper share classes are still rated Bronze.
Merian UK Alpha (IRL)
Fatima Khizou
An experienced lead manager and proven approach continue to make Merian UK Alpha (IRL) an appealing UK large-cap option for investors with higher risk tolerances. Our positive view on the investment team and approach has not changed. However, under our enhanced ratings framework, which places a greater focus on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the R GBP clean share class has been downgraded to Bronze from Silver. Ratings on the other share classes range from Bronze to Silver.
Note: under the Morningstar methodology different share classes of funds may have different ratings
