· Nine new strategies enter the Square Mile Academy of Funds, including two investment trusts
· Two ratings are upgraded
· One rating is retained; one rating suspended
Analysts at Square Mile Investment Consulting and Research (Square Mile) today confirm changes to the Square Mile Academy of Funds based on intelligence gained during meetings with fund groups over the course of August and September and in the light of recent corporate announcements. The following actions have been taken.
New ratings
BNY Mellon Multi-Asset Moderate, Income, and Growth funds awarded new ratings
Square Mile’s team of analysts have awarded an A rating to the BNY Mellon Multi-Asset Growth and Multi-Asset Income funds and a Positive Prospect rating to the BNY Mellon Multi-Asset Moderate fund and they enter Square Mile’s Academy of Funds. The BNY Mellon Multi-Asset Growth fund has a strong track record of delivering returns in excess of its peer group, whilst the BNY Mellon Multi-Asset Income fund has consistently delivered a regular and growing income in addition to a competitive total return. Although the BNY Mellon Multi-Asset Moderate fund has a less established track record, it benefits from the strength of the team and the consistent application of an approach to asset allocation which the analysts hold in high regard.
Key to the strategies’ success are the views of the mixed assets team, led by the experienced Paul Flood, who is the lead manager on the three newly rated funds. Complementing the already rated BNY Mellon Multi-Asset Balanced fund, Square Mile believe these funds to be a robust option for investors seeking a range of actively managed multi-asset portfolios. (Decision as at 26.09.24)
JPM Japan fund and JPMorgan Japanese Investment Trust awarded A ratings
Square Mile has introduced the JPM Japan fund and its closed-ended equivalent, the JPMorgan Japanese Investment Trust, to the Academy with A ratings. Both vehicles are managed by Nicholas Weindling with support from portfolio managers Miyako Urabe and Shoichi Mizusawa, alongside a team of dedicated sector analysts. The team seeks to identify quality growth companies with sustainable business models that it believes capable of compounding earnings over the long term. Square Mile considers this strategy, through either an open or closed-ended structure, to be an attractive option for investors seeking exposure to growth companies listed in Japan. (Decision as at 20.09.24)
MAN GLG Global Investment Grade Opportunities and MAN GLG Dynamic Income funds awarded A ratings
Square Mile’s analysts have awarded A ratings to the MAN GLG Global Investment Grade Opportunities and MAN GLG Dynamic Income funds and they enter the Academy. The funds are managed by Jonathan Golan and provide access to an extension of the highly successful approach he has delivered in managing the MAN GLG Sterling Corporate Bond fund.
Both strategies have a global remit with the MAN GLG Global Investment Grade Opportunities fund having a maximum 20 per cent allocation to high yield assets. In contrast, the MAN GLG Dynamic Income fund is managed using an unconstrained approach and is fully flexible in terms of its asset allocation across investment grade and high yielding bonds.
The analysts consider Mr Golan to be a talented fixed income manager who is passionate about credit selection and they see both funds as attractive options for investors seeking exposure to small and medium cap companies within global fixed income markets. (Decision as at 16.09.24)
Redwheel Next Generation Emerging Markets Equity fund awarded an A rating
Square Mile confirms the introduction of the Redwheel Next Generation Emerging Markets Equity fund to the Academy of Funds with an A rating. The analysts believe this to be an attractive strategy that should suit long-term investors seeking exposure to the smaller emerging and frontier markets. The strategy is run by a very experienced portfolio manager and a highly capable team whom the analysts have followed for several years through their mainstream Redwheel Global Emerging Markets strategy. (Decision as at 03.09.24)
AllianceBernstein Sustainable US Equity fund awarded a Responsible A rating
Square Mile’s analysts have introduced the AllianceBernstein Sustainable US Equity Fund into the Academy with a Responsible A rating. Managed by Daniel Roarty and Ben Ruegsegger, they are supported by a team of sector analysts within the Sustainable Thematic Equity Investment team. The team’s focus is on quality growth companies that have revenue alignment with the UN Sustainable Development Goals, underpinned by the belief that companies providing products and services that contribute to positive social and environmental outcomes have a greater probability of enduring growth. The analysts believe this to be an attractive core-growth fund offering exposure to North American equities with a sustainable thematic investment approach. (Decision as at 29.08.24)
Upgraded ratings
JPM Emerging Markets Income fund and JPMorgan Global Emerging Markets Income Trust upgraded to AA ratings
Square Mile has upgraded the ratings held by both the JPM Emerging Markets Income fund and its closed-ended equivalent, JPMorgan Global Emerging Markets Income Trust, from A to AA. This reflects the analysts’ conviction in the lead manager, Omar Negyal, and the consistent application of his investment approach in what have been particularly challenging market conditions in recent years. The analysts believe both versions of this strategy to represent an excellent option for long-term investors seeking to benefit from the region’s income and growth potential. (Decision as at 02.09.24)
Rating retained
WS Montanaro Better World fund retains Responsible A rating
Square Mile’s analysts conducted a formal review of the fund on the recent news that Adam Montanaro has been appointed co-portfolio manager of the WS Montanaro Better World fund. They believe the reintroduction of a co-portfolio manager structure to be positive for the fund’s management as it ensures a level of continuity as part of any future succession planning. Mr Montanaro works alongside the incumbent portfolio manager Mark Rogers who became sole manager of this fund in September 2023 following the departure from the strategy of Charles Montanaro, founder and portfolio manager at Montanaro Asset Management. Mr Rogers has been managing this strategy since its inception in 2018 and has also recently relinquished his role as head of investment team to focus solely on investment management.
The analysts have decided that these moves are prudent and have therefore decided to retain their Responsible A rating on the Montanaro Better World fund. (Decision as at 19.08.24)
Rating suspended
Keystone Positive Change Investment Trust’s Responsible A rating suspended
Square Mile has decided to suspend the Responsible A rating held by the Keystone Positive Change Investment Trust plc. This follows the announcement by the London Stock Exchange that the trust’s board has initiated a consultation with shareholders to potentially roll the trust into its open-ended equivalent, the Ballie Gifford Positive Change fund.
The trust has faced ongoing underperformance relative to its benchmark and its net asset value (NAV) has sat at a persistent discount to its share price, which has continued even as global equity markets have recovered. This has been despite share buybacks and other corrective actions taken by the board to increase the trust’s market capitalisation and its appeal to investors.
The board’s course of action raises doubts about the future viability and stability of the trust for long-term investors. Therefore, Square Mile’s analysts have suspended the trust’s rating pending further announcements on the outcome of the shareholder consultation. (Decision as at 11.09.24)
