Upgrades
M&G (Lux) European Corporate Bond CI – Bronze from Neutral
Giovanni Cafaro
A reduction in fees, which have now been taken into account as part of the strategy’s formal review, has boosted M&G (Lux) European Corporate Bond’s appeal. Whilst pillar ratings remain unchanged, this measure has helped competitiveness versus peers in the category; therefore, it results in the clean share class being upgraded to Bronze from Neutral, whilst more expensive ones remain at Neutral.
Downgrades
TM CRUX European Special Situations – Neutral from Silver
Daniel Haydon
TM CRUX European Special Situations is run by its long-standing manager Richard Pease. There are a number of considerations that give us pause for thought within our People, Process, and Parent analysis framework. With what we see as concrete succession planning not yet in place, coupled with the eventual shape of this team now being dictated by what might happen in terms of the firm’s M&A activity, we believe the medium- to long-term path is unclear. This is accompanied by some examples of inconsistent application of the process in recent years. This leads to a Morningstar Analyst Rating of Neutral for all share classes, a downgrade from Silver.
Rerated from Under Review
abrdn UK Smaller Companies I – Silver from Under Review
abrdn UK Smaller Companies Growth Trust – Silver from Under Review
Daniel Haydon
Portfolio manager and veteran investor Harry Nimmo will retire from the Abrdn UK Smaller Companies strategy at the end of 2022. He was the architect of this strategy and lead manager since inception in 1997. He will leave investors in good hands, with current co-manager Abbie Glennie set to take the lead come January 2023. She will have continued support from Amanda Yeaman, who will become deputy PM at that time too, as well as the wider team. The well-defined process, combined with a sensibly executed transition plan brings comfort, though there is nonetheless some loss of experience. For abrdn UK Smaller Companies, this leads to a downgrade of the Morningstar analyst rating to Silver from Gold for the cheaper share classes, including the clean I share class, while more expensive share classes retain their Silver rating. For the abrdn UK Smaller Companies Growth Trust, this leads to a downgrade to Silver from Gold. The funds were previously placed Under Review.
GAM Star Japan Leaders Institutional – Bronze from Under Review
Ronald van Genderen, CFA
Comanager Reiko Mito left the firm in August 2022 and she will be missed in her capacity as an experienced challenger for lead manager Ernst Glanzmann, having worked alongside him as comanager since 2011. Although Glanzmann’s retirement is not imminent, we thought Mito to be his natural successor and her departure introduces some elevated key-person risk. Glanzmann has been the founding father of the strategy and we hold him in high regard as one of the most experienced portfolio managers within the Japan equity space. He will continue to be supported by two other team members, keeping the team’s research capacity at a similar level as before. With its long-tenured and highly regarded lead manager still at the helm and adequate supporting resources at hand, we maintain our conviction in this team. So do we in the distinct and very consistently applied high-quality and conviction-focused approach. The Morningstar Analyst Ratings are reinstated ranging from Silver to Neutral, with the Institutional clean share classes rated Bronze, similar to those before the fund was placed Under Review.
