New Ratings
Vanguard Global Equity – Silver
Robert Starkey
We have initiated coverage on the Vanguard Global Equity strategy with a Morningstar Analyst Rating of Silver across its share classes. Vanguard, which has oversight of this sub-advised strategy, has a stable senior investment team which is experienced in the selection and ongoing oversight of their underlying active fund managers. While this is a relatively new product for the UK, having been launched in 2016, Vanguard has been running focussed active multimanager offerings like this for US clients since 1995, and has executed to good effect. Wellington and Baillie Gifford, the two subadvisors, manage assets on a 50/50 split and the resulting overall portfolio is diversified and balanced with approximately 200 holdings. Vanguard’s emphasis on providing cost effective investment solutions means that investors also benefit from an exposure to these high-quality stock-pickers without paying a high price for the luxury.
Vanguard Euro Inflation-Linked Government Bond Index Fund – Silver
Jose Garcia Zarate
Vanguard Euro Inflation Linked Government Bond Index Fund is a compelling proposition for investors seeking a core holding in eurozone inflation-linked government bonds. The market it replicates is small, and compared to that of other geographies – for example the UK – it doesn’t have excessively high duration. There are limited opportunities to add value on a consistent manner, and so a low-cost passive approach is in good stead to deliver above-average returns over the long-term. In that respect, both the standard and institutional plus share classes are very competitively priced. However, they both require a high minimum investment and so it is fair to say that they will not be accessible to most retail investors. The strategy is awarded an Analyst Rating of Silver for all share classes.
Upgrades
Schroder ISF Emerging Asia – Gold from Silver
Germaine Share
We have increased our conviction in Louisa Lo as an Asian equity manager at Schroder ISF Emerging Asia. We have long recognized her as a Greater China equity expert, and over time she has proved to be able to add value in other Asian markets. Along with the Greater China region’s ever-growing importance in the Asian equity investment universe, particularly with the increased accessibility of Ashares, we believe that Lo is well poised to drive the strategy’s continued success. While we are keeping a close eye on the supporting team’s persistent turnover, our utmost confidence in Lo has led us to upgrade the People Pillar to High from Above Average. Lo continues to employ a robust team’s quality-growth-focused investment process, which has proved over multiple market cycles, and the Process Pillar was reiterated at High. As a result, the Morningstar Analyst Rating of the strategy’s clean share class C Acc USD was upgraded to Gold from Silver. Other share classes land at Gold or Silver, depending on their fee levels.
Downgrades
Schroder ISF Taiwanese Equity – Silver from Gold
Germaine Share
Schroder ISF Taiwanese Equity continues to benefit from experienced and savvy portfolio manager Louisa Lo and a time-tested, quality-growth-focused investment process. Although we maintain our high conviction on both the People and Process fronts, increased competition from lower-priced rivals in the Taiwan large-cap equity Morningstar Category drove the Morningstar Analyst Rating of the strategy’s clean share class C Acc USD down to Silver from Gold. Other share classes land at Gold or Silver, depending on its fee levels.
Note: Under Morningstar's ratings methodology, different share classes of a fund may have a different rating
