- Four new ratings, including three new Responsible ratings
- One rating reinstated
- Six ratings retained
- Two ratings removed
Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 51 interviews with investment professionals from 29 asset management groups over the course of December 2021. Based on the intelligence gained at these meetings, the following actions have been taken.
Jupiter Merlin Conservative Portfolio awarded a AA Rating
Square Mile’s team of research analysts has added the Jupiter Merlin Conservative Portfolio to the Square Mile Academy of Funds with a AA rating. This rating is aligned with the Growth, Income and Balanced portfolios which are also managed by Jupiter’s Merlin team and already sit within the Academy. The analysts hold this team, led by John Chatfeild-Roberts and David Lewis, in high regard and consider this to be a compelling offering for investors seeking a more defensively-orientated product run by experienced investment managers, with a strong heritage of managing multi-asset, fund-of-funds strategies. (Decision as at 23.12.21)
FSSA Japan Focus fund awarded a Responsible A rating
Square Mile has awarded the FSSA Japan Focus fund a Responsible A rating. This concentrated mandate is managed by Sophia Li and Martin Lau, and follows FSSA’s firm-wide investment approach, with the team aiming to identify quality companies with strong financials, franchises and quality management teams, and that they can trust as responsible stewards of their clients’ capital. ESG and sustainability is integrated throughout their investment process, excluding companies within ‘sin’ sectors and management teams with poor track records. Square Mile’s analysts have a favourable view of their proven investment philosophy and process and believe this fund to be suitable for those that want to invest responsibly within Japan, but also those that are willing to accept higher volatility than the MSCI Japan index over shorter time periods. That being said, during the current managers’ tenure the fund has rewarded investors with excellent risk adjusted returns over the long run. (Decision as at 15.12.21)
L&G Future World ESG UK Index & L&G Future World ESG Developed Index funds awarded Responsible Recommended ratings
The Square Mile research team has awarded both the L&G Future World ESG Developed Index and the L&G Future World ESG UK Index funds Responsible Recommended ratings. The analysts believe these funds offer investors passive global and UK equity exposure at a very reasonable price, while avoiding ‘sin’ stocks. In addition, they provide the benefits of a positive tilt towards companies with a high ESG score and negative tilt away from those with low scores. (Decision as at 07.12.21)
Invesco Distribution fund reintroduced to the Academy with an A rating
Square Mile’s analysts have reinstated the Invesco Distribution fund into the Academy with an A rating in the belief that the fund’s lead manager, Edward Craven, is well placed to run the strategy in future. He will continue to apply the same philosophy and approach as his predecessor, Paul Causer, who retires at the end of 2021 along with his fellow co-head of fixed income, Paul Read. Square Mile is reassured that, despite Mr Craven’s relatively limited fund management experience, there will be significant continuity in his approach which draws heavily on the resources of the impressive Henley-based fixed income team, as well as the wider business. Moreover, he remains wedded to the well-established fixed income team process. For the equity element of this strategy, he will continue to draw on the experience of Ciaran Mallon, as well as other members of the equity team. (Decision as at 15.12.21)
TwentyFour Asset Management: all four ratings retained
Following the news of the change of CEO at TwentyFour Asset Management, Square Mile’s analysts reviewed the ratings awarded to all four TwentyFour funds within the Academy and have decided to take no action. Mark Holman, partner, portfolio manager and CEO, will step down as CEO to concentrate on portfolio management within the Multi-Sector Bond Team. Ben Hayward, partner and portfolio manager within the asset-backed securities team, is replacing Mr Holman as CEO, effective 4th January 2022.
Given Mr Holman and Mr Hayward are both founding partners of the company, Square Mile does not anticipate the impact of these changes to be significant. From a fund perspective, the TwentyFour Strategic Income fund will now benefit from Mark Holman’s focus on investment management. While the TwentyFour Monument Bond fund will lose much of Ben Hayward’s direct input, it is managed with a team approach across 11 investment managers, three of whom are partners in the firm. Square Mile therefore anticipates any impact on the fund to be manageable. (Decision as at 09.12.21)