Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 64 interviews with investment professionals from 40 asset management groups during October 2024. Based on the intelligence gained during these meetings, and following reviews in light of corporate announcements, the following actions have been taken.
New ratings
Schroder Global Sustainable Value fund awarded a Responsible A rating
Square Mile’s team of analysts have awarded the Schroder Global Sustainable Value fund a Responsible A rating, and it enters the Academy of Funds. This fund offers investors access to a strong value investing proposition which targets globally undervalued companies committed to responsible practices and positive societal outcomes. The analysts note this sustainable value approach as a key differentiator. The sustainable investment universe is heavily biased towards growth stocks, and so the fund provides style diversification, looking for value companies that are better positioned from a sustainability perspective when compared to industry peers. (Decision as at 29.10.24)
The Diverse Income Trust awarded an A rating
Square Mile has introduced the Diverse Income Trust to the Academy of Funds with an A rating. The analysts believe this to be an interesting option for investors seeking to diversify their sources of income from UK equities. It is managed by seasoned investors Gervais Williams and Martin Turner who seek to provide an attractive and growing income along with long-term capital growth through active investment across large, mid, and small-cap UK stocks. Their investment strategy focuses on identifying companies that are highly cash-generative, boast strong balance sheets, and have the potential for sustainable growth. (Decision as at 24.10.24)
JPM Europe Equity Absolute Alpha fund awarded an A rating
Square Mile’s analysts have awarded the JPM Europe Equity Absolute Alpha fund an A rating and it enters the Academy of Funds. This fund combines both long and short investments in European (including the UK) equity markets and exhibits the characteristics that the analysts regard as highly desirable in an absolute return strategy. Importantly, its returns are lowly correlated to stock market indices and the fund has an impressive record of protecting investors’ capital in stock market downturns, when it matters most. This is mainly because the fund always has very low net market exposure. Instead, the dominant driver of returns is stock selection and the fund has an excellent record of generating alpha from both long and short investments. The analysts believe that the fund’s impressive track record, proven investment process and the resources of JP Morgan Asset Management make this an attractive offering. (Decision as at 23.10.24)
Upgraded ratings
Fidelity MoneyBuilder Dividend and Fidelity Enhanced Income funds upgraded to A ratings
Square Mile’s analysts confirm that both the Fidelity MoneyBuilder Dividend and Fidelity Enhanced Income funds have been upgraded from Positive Prospect to A ratings. Following the retirement of Michael Clark, both strategies’ long-standing incumbent manager, at the end of 2022, Rupert Gifford, Mr Clark’s co-manager at the point of his departure, assumed sole lead manager responsibility. The analysts now have a good level of confidence in Mr Gifford, who continues to manage these funds in a conservative, but conviction-led manner. (Decision as at 25.10.24)
Fidelity UK Smaller Companies fund upgraded from A to AA rating
Square Mile’s analysts have upgraded the rating held by the Fidelity UK Smaller Companies fund from A to AA. This is in recognition of their conviction in Jonathan Winton’s consistent investment approach since taking over as the strategy’s lead manager in 2019. Despite challenging market conditions for the UK Smaller Companies sector in recent years, the fund has demonstrated resilience and delivered strong performance both on an absolute and relative basis. (Decision as at 16.10.24)
Ratings retained
CT Managed Equity & Bond, CT Managed Equity Focused and CT Managed Equity funds retain ratings
On the news that Alex Lyle, Head of Managed Funds, EMEA, and manager on the CT Managed Fund range, is to retire in April 2025, Square Mile’s analysts have decided to retain the A ratings held by the CT Managed Equity & Bond, CT Managed Equity Focused and CT Managed Equity funds. The funds follow a team-based approach to management with the managers drawing on the broader house views at Columbia Threadneedle Investments. Co-manager Matthew Rees will continue to manage the funds alongside Christopher Mahon and Ben Rodriguez, who will replace Mr Lyle. There will be no changes to the investment approach applied to the funds and therefore the analysts are comfortable retaining their ratings.
Square Mile would like to take this opportunity to congratulate Mr Lyle on his long and distinguished career and wish him all the best in retirement. (Decision as at 22.10.24)
Mirabaud Sustainable Global Dividend fund retains Positive Prospect rating
Square Mile’s analysts have decided to maintain the Positive Prospect rating held by the Mirabaud Sustainable Global Dividend fund, despite the news that co-portfolio manager, Anu Narula, will leave the firm in November 2024. They acknowledge that this is a disappointing development for the fund and for Mirabaud’s Global Equities team, which Mr Narula led. However, they view Paul Middleton as this strategy’s primary co-manager and one of the original architects of the process having worked closely with Mr Narula since 2009, and on this fund at Mirabaud since 2013.
The Square Mile Positive Prospect rating was awarded contingent on the strategy’s continued growth in assets to level that would permit a full rating. The analysts believe that under Mr Middleton’s sole leadership, the fund can still provide investors with a high conviction, quality-bias offering in the global equity income sector. In light of this latest news, however, the analysts will monitor the contributing team closely as well as other developments on the fund to ensure it remains on track to achieve the goals they have set out for it. (Decision as at 14.10.24)
Ratings removed
Jupiter Global Value Equity fund loses A rating
Square Mile’s analysts suspended the A rating held by the Jupiter Global Value Equity fund in January 2024 on news that managers Ben Whitmore and Dermot Murphy were leaving Jupiter to start a new venture, Brickwood Asset Management. They have now taken the decision to remove this rating as Mr Whitmore and Mr Murphy will not run this strategy on a sub-advised basis. Whilst the analysts acknowledge that the appointment of Brian McCormick as the fund’s lead manager represents some continuity of approach and ensures that the mandate remains internally managed by Jupiter, the fund’s A rating was predicated on the expertise of Mr Whitmore and Mr Murphy. (Decision as at 24.10.24)
M&G Sustainable Multi Asset Cautious, Balanced and Growth funds lose Responsible Positive Prospect ratings
Square Mile’s analysts are disappointed to announce the removal of the Responsible Positive Prospect ratings on the M&G Sustainable Multi Asset Cautious, Balanced and Growth funds. In a shareholder letter, M&G confirmed the rationale for a proposed merger of these funds into some of its non-sustainable funds. M&G states it has not attracted a sufficient level of investor interest, and consequently, the required amount of assets to make these funds commercially viable.
The M&G Sustainable Multi Asset Cautious and Balanced funds will be merged into the M&G Episode Allocation fund and M&G Sustainable Multi Asset Growth will be merged into M&G Episode Growth, subject to shareholder approval. Should shareholders approve this proposal, the merger will take place on Friday 22nd November 2024. (Decision as at 04.10.24)
