New Ratings
GMO Systematic Global Macro – Neutral
Francesco Paganelli
We have initiated coverage of GMO Systematic Global Macro (SGM) Major Markets with a Morningstar Analyst Rating of Neutral across all its share classes. The strategy uses a thoughtful portfolio construction process combining well-known and time-tested signals and earns an Above Average Process Pillar rating. The strategy lacks the dedicated resources needed to keep up with mores ophisticated peers, however, which results in an Average People Pillar rating. Altogether, GMO SGM Major Markets is a solid offering with reasonable fees, but it is relatively light on resources.
Rathbone Multi Asset Strategic Growth – Bronze
Rajesh Yadav
We have initiated coverage on Rathbone Multi-Asset Strategic Growth, a sound option for investors seeking a diversified multi-asset portfolio aiming to protect purchasing power and deliver modest capital gains over time. The strategy is in the reliable hands of David Coombs, who has been at the helm since mid-2012. He is closely supported by an able deputy in Will McIntosh-Whyte. Success here lies in the strategy’s disciplined investment process, which has been crafted by Coombs over his two decades of experience in multi-asset investing at various organisations. He has also built a respectable track record within the GBP Moderate Allocation Morningstar Category. Under our enhanced ratings framework, which puts more emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the clean S share class is initiated at Bronze, while the more expensive share classes are rated Neutral.
Upgrades
Fidelity Global Special Situations – Gold from Silver
Bhavik Parekh
With the backing of Fidelity's vast analytical resources, the experienced Jeremy Podger continues to keep investors in Fidelity Global Special Situations on a steady path through a variety of market conditions. The continued consistency in the sensible approach has contributed to increased conviction with an upgrade of the Process Pillar to High. Under our enhanced ratings framework, which places a greater emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for all share classes are upgraded to Gold from Silver.
TM CRUX European Special Situations – Gold from Silver
Robert Starkey
Under our enhanced ratings framework, which places a greater emphasis on fees and expected benchmark-relative performance, the combination of a best in class manager and stable supporting team implemented via an established approach awards the I GBP share classes of TM CRUX European Special Situations a Morningstar Analyst Rating of Gold, up from Silver.
Fidelity World – Gold from Silver
Bhavik Parekh
With the backing of Fidelity's vast analytical resources, the experienced Jeremy Podger continues to keep investors in Fidelity World on a steady path through a variety of market conditions. The continued consistency in the sensible approach has contributed to increased conviction with an upgrade of the Process Pillar to High. Under our enhanced ratings framework, which places a greater emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the Y-Acc share class is upgraded to Gold from Silver. Other share classes range from Gold to Silver, dependent on cost.
PGIM Jennison US Growth – Gold from Silver
Bhavik Parekh
PGIM Jennison US Growth, run by subadvisor Jennison Associates, has one of the industry’s strongest growth-orientated investment teams. Also considering a well-executed process makes this aggressive growth option worthwhile. Under our enhanced ratings framework, which places a greater emphasis on fees and expected benchmark-relative performance, the Morningstar Analyst Rating for the I Acc share class is upgraded to Gold from Silver. Other share classes range from Gold to Silver, dependent on cost.
Baillie Gifford Global Alpha Growth – Silver from Bronze
Fatima Khizou
Baillie Gifford Global Alpha Growth’s experienced management team and broad analytical resources, together with a disciplined investment approach, continue to make it an attractive global growth equity offering. 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 B clean share class has been upgraded to Silver. Ratings on the other share classes range from Bronze to Silver.
Baillie Gifford International – Silver from Bronze
Fatima Khizou
Baillie Gifford International’s experienced management team and broad analytical resources, together with a disciplined investment approach, continue to make it an attractive global growth equity offering. 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 B clean share class has been upgraded to Silver. Ratings on the other share classes range from Bronze to Silver.
Monks Investment Trust (MNKS) – Silver from Bronze
Fatima Khizou
Monks’ experienced management team and broad analytical resources, together with a disciplined investment approach, continue to make it an attractive global growth equity offering. 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 fund’s Morningstar Analyst Rating has been upgraded to Silver from Bronze.
Downgrades
BNY Mellon Global Real Return – Bronze from Silver
BNY Mellon Real Return – Bronze from Silver
Rajesh Yadav
Although the retirement of long-tenured manager Iain Stewart in 2019 was a loss, we continue to have a positive view of BNY Mellon's Real Return team and its distinctive investment process. In fact, Newton had been preparing for Stewart's retirement for the past six years, during which time the leadership transitioned smoothly to Suzanne Hutchins. She is an experienced and long-standing team member and has been joined by others from within Newton. That said, under our new ratings framework, which places a greater emphasis on fees and benchmark-relative performance, the Morningstar Analyst Rating for the fund's clean W share class is lowered to Bronze from Silver, while more expensive share classes are rated Neutral.
Comgest Growth Emerging Market – Silver from Gold
Magellan – Silver from Gold
Mathieu Caquineau
The Magellan/Comgest Growth Emerging Markets strategy is losing its longest-tenured manager. Wojciech Stanislawski will step back from portfolio management in January 2021 to take a new role at Comgest. He has managed the strategy since 2000 and had worked alongside Vincent Strauss, its former skipper, for 15 years. When Strauss retired in 2015, Stanislawski naturally took over the strategy. As part of the succession plan, Emil Wolter was named comanager in 2014. Longtime team members David Raper and Charles Biderman earned manager roles in 2016. The rest of the team (16 managers/analysts) is large and experienced. We therefore maintain confidence in the team's abilities, and we do not expect disruption as Stanislawski steps back, but our level of conviction is slightly altered.
The managers' joint tenure at four years is short. Also, the team's dedicated resources to China have been bolstered since 2017 and it will take time to fully assess their contribution and integration at the firm. The investment approach, focused on quality growth stocks, will remain unchanged going forward. We think the discipline of the strategy and the thoroughness of the research underpinning stock selection give the fund a durable edge. Overall, the strategy remains a strong option, as reflected in a Morningstar Analyst Rating of Silver for most share classes instead of Gold previously. The most expensive retail share classes land at Bronze.
Robeco Chinese Equities – Neutral from Bronze
Andrew Daniels
Victoria Mio, Robeco’s former CIO of Chinese equities and this strategy’s lead manager since 2007, left Robeco on September 11 2020. Taking over as lead manager is Liying Du, who joined Robeco in 2013. Du has 11 years of investment experience and had been the backup manager here since April 2016. Du provides a level of continuity and has demonstrated solid insights during prior meetings. However, we will miss Mio’s steady hands guiding the strategy, considering her 25-plus years of experience, and note that the team is significantly less experienced than it once was.
While the firm plans to hire an experienced analyst, which would bring the lean team back to six members, Du will maintain most of her stock coverage in the interim, thereby introducing workload concerns. We will also monitor how Du works with Jie Lu, who took over Mio’s team leadership responsibilities, which include forming the top-down views for this strategy’s flexible approach. Overall, the departure of Mio has lowered our conviction in Robeco Chinese Equities’ investment team, driving the People rating to Average from Above Average. As a result, the strategy’s Morningstar Analyst Ratings have been downgraded to Neutral from Bronze across all share classes.
Note: Under Morningstar's ratings methodology, different share classes of a fund may have a different rating
