- Eight new funds enter Academy of Funds, including one investment trust
- Two ratings retained
- Two funds lose ratings
Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 52 interviews with investment professionals from 36 asset management groups during April 2024. Based on the intelligence gained during these meetings, and following reviews in the light of corporate announcements, the following actions have been taken.
New ratings
Premier Miton Diversified Growth Fund Range awarded A rating.
Square Mile’s team of analysts has awarded A ratings to the Premier Miton Diversified Cautious Growth, Diversified Balanced Growth, Diversified Growth and Diversified Dynamic Growth funds and they enter the Square Mile Academy of Funds. The flagship fund in the range, Diversified Growth, has delivered strong risk adjusted returns for over a decade, whilst the other three funds have achieved this since their launch over five years ago. Key to the strategies’ success are the views of the specialist investment teams at Premier Miton which are responsible for the underlying sleeves which collectively make up the funds within the range. The analysts believe them to be a robust option for investors seeking a range of growth-orientated actively managed multi-asset portfolios.(Decision as at 30.4.24)
HSBC US Multi Factor fund awarded A rating
Square Mile’s analysts have introduced the HSBC US Multi Factor fund to the Academy of Funds with an A rating. They hold HSBC’s Equity Research team in high regard and note their ability to consistently provide alpha across a range of strategies since July 2006. This fund offers investors a core exposure to US Equities targeting an ex-ante tracking error of 2.5% per annum from the S&P 500 while focusing on five factors: value; quality; momentum; low risk and size. This is one of the cheapest active funds in the North American sector and therefore suitable for investors cost constraints. Square Mile believes that this fund will be a good complement to the existing active US Equity funds already within the Square Mile Academy. (Decision as at 15.04.24)
Vanguard Global Corporate Bond Index and Vanguard Global Short Term Corporate Bond Index funds awarded Recommended ratings
Square Mile has awarded a Recommended rating to the Vanguard Global Corporate Bond Index and the Vanguard Global Short Term Corporate Bond Index funds. The Vanguard Global Corporate Bond Index tracks the Bloomberg Barclays Global Aggregate Float Adjusted Corporate Index Hedged in GBP and provides investors with access to global corporate bonds at a competitive price.
The Vanguard Global Short Term Corporate Bond Index tracks the Bloomberg Barclays Global Aggregate Corporate 1-5 Year Float Adjusted Index Hedged in GBP and provides investors with access to short dated global corporate bonds at a lower price than a comparable active fund.
Both funds’ benchmarks are structured in such a way that the largest constituents will be companies with the highest absolute levels of debt. While this could create a concern from a credit risk perspective, it is difficult to avoid given the size of the investment universe. (Decision as at 15.04.24)
Mercantile Investment Trust awarded A rating
Square Mile’s analysts have awarded the Mercantile Investment Trust an A rating and it joins the Square Mile Academy of Funds. The strategy is led by the experienced Guy Anderson who is part of a well-resourced team at JP Morgan. The trust predominantly focuses on higher quality, faster growing UK equities listed outside of the FTSE100. Investors benefit from a repeatable, efficacious investment process, the liquidity of a £1.7bn investment vehicle and a current yield of approximately three per cent which has grown each year over the past 10 years. The analysts believe that this strategy complements the existing suite of UK equity focused funds which hold a Square Mile rating.
Ratings retained
Royal London Index Linked and Royal London Short Duration Gilts funds retain A ratings
Royal London Asset Management (RLAM) recently announced that Jonathan Platt, Head of Fixed Income, will retire at the end of the year. He will be succeeded by William Nicoll, Head of Private Assets who joined RLAM in October 2023 having spent 19 years at M&G, where he was CIO, Private and Alternative Assets at the point of his departure. Despite this development, Square Mile’s analysts do not foresee any changes in the day-to-day management of either the Royal London Short Duration Gilts or Royal London Index Linked funds, with the respective underlying philosophy and investment teams remaining in place. They are therefore comfortable in retaining their A ratings on both strategies.
Square Mile would like to take this opportunity to congratulate Mr Platt on his long and successful career and wish him all the best in his retirement. (Decision as at 18.04.24)
Ratings removed
PIMCO GIS Dynamic Multi-Asset fund loses A rating
Square Mile’s analysts have decided to remove the A rating held by the PIMCO GIS Dynamic Multi-Asset fund on the news that lead manager Geraldine Sundstrom is to leave PIMCO at the end of May 2024. The fund will continue to be managed by the Asset Allocation Portfolio Management Team at PIMCO, including co-managers Erin Browne and Emmanuel Sharef who have worked closely together for several years, supported by the broader cross asset resources of the firm. However, whilst Square Mile acknowledges PIMCO’s strong resources and team approach, the fund’s rating was largely predicated on Ms Sundstrom’s experience of managing dynamic multi-asset strategies. (Decision as at 23.04.24)
abrdn Europe ex-UK Income Equity Fund loses Positive Prospect rating
Following the recent news that Stuart Brown, portfolio manager of the abrdn Europe ex-UK Income Equity fund, is to leave abrdn, Square Mile’s analysts have decided to remove the fund from the Academy of Funds. It will be managed in future by Charles Luke who joined the firm in 2000 and is a senior member of the abrdn’s UK and European equities team and lead manager of the Murray Income Trust Plc. However, the fund has lost its two portfolio managers within a relatively short period, with the previous co-manager departing in September 2023, and Square Mile would therefore like time to monitor the strategy and its investment team. (Decision as at 22.04.24)
