Summer 2023: the funds gaining and losing their Elite Ratings

Following its summer investment committee, FundCalibre has awarded seven new Elite Ratings and three new Elite Radar badges. A further eight funds have moved between the ratings, while 12 funds have lost their ratings.

Seven newly Elite Rated funds:

1. Fidelity European

This is a core European equity fund with a disciplined and cautious long-term focus. Although not an income fund, the team wants companies which can sustainably grow their dividends over time. The team describes its philosophy as ‘quality at reasonable price’. Manager Sam Morse has over 30 years of experience and is ably supported by co-manager Marcel Stotzel.

2. FSSA Asia Focus

This is a high conviction fund which invests in Asian firms demonstrating sustainable and predictable growth. It places a particular emphasis on governance and investing in quality companies that respect the interests of minority shareholders.  Its managers are highly experienced, and the fund has historically delivered better returns than the index and its peers with less risk.

3. Invesco Global Emerging Markets

This is a highly active fund that consists of around 50 best ideas across emerging markets. Its team has a tight focus on valuation and contrarianism. The high esteem in which we hold this fund has been backed up by its outstanding long-term track record. It benefits from an adaptable investment style that allows it to exploit changing market conditions and inefficiencies effectively.

4. Liontrust European Dynamic

The team behind this fund believes cash flow is the single most important determinant of shareholder return, so the portfolio is made up of companies that have strong cash-flow characteristics. We are very impressed by the rigorous process and collaborative approach that has helped contribute to stellar long-term performance.

5. Orbis Global Balanced

The manager of this fund scours the world for the best investment opportunities across a number of asset classes including equities, fixed income, and commodities. He believes one of the key advantages of the portfolio is the ability to focus on best ideas and making them “fight for capital”, with every holding needing to be an active contributor to the fund. We also like the unique fee structure which means investors pay when the fund outperforms but are refunded in periods of underperformance.

You can listen to a podcast interview with Alec Cutler, Orbis manager and self-proclaimed contrarian, here:

   6. Premier Miton Strategic Monthly Income Bond

This fund aims to provide a steady monthly income while minimising volatility and providing a better risk-adjusted income compared to both bond funds and equity income options. This fund is very active in nature and delivers a healthy yield, with the added bonus of it being paid monthly.

   7. TB Evenlode Global Equity 

Evenlode focuses exclusively on quality companies, which are characterised by their ability to achieve sustainable growth over time while minimising the need for additional capital reinvestment. This fund is a concentrated portfolio of these quality companies from across the world. This fund has benefitted from having two very impressive fund managers and a clear and proven investment process used by the team across its strategies.

Three new Elite Radar badges:

1. Allianz UK Listed Opportunities

This is a contrarian value UK equity fund that invests in UK businesses of all sizes. The manager seeks out cheap companies with a margin of safety and is not afraid to go against the grain. This fund has a solid value strategy and a clear process that has consistently worked over many years. We like the new lead manager’s flexible pragmatic nature, and the fund never strays too far from its core value principles.

2. JPM Climate Change Solutions

As the name suggests, this fund, which launched in June 2021, invests in companies that are developing solutions required to address climate change. The key themes it seeks to tackle are renewables & electrification, sustainable transport, sustainable food & water, sustainable construction, and recycling & re-use. The fund also  has access to an impressive and innovative internal AI system called ‘Themebot’ to help drive a more efficient process and find opportunities.

3. R&M Global Sustainable Opportunities

This is a high conviction, value-orientated fund, that invests in companies of all sizes. It launched in 2022 and offers a real alternative to the average global sustainable fund, which usually comes with a large-cap growth style tilt. The fund’s favoured area is finding undervalued quality businesses. Its key sustainability objective is aligning with net zero by 2050. It’s interesting, different, and applying a proven process.

Five funds moving from Radar to Rated

1. Artemis Target Return Bond 

Launched in December 2019, this is a ‘Steady Eddie’ targeted absolute return fund, with a heavy emphasis on controlling risk. It invests globally in government and corporate bonds as well as asset-backed and mortgage-backed securities. This is an excellent fund for those who dislike volatility but want a better return than cash. With a three year track record and having passed AlphaQuest, it now moves from Radar to Rated.

2. BlackRock European Dynamic

Giles Rothbarth became co-manager of this fund in 2019 and lead manager in 2023. He has a flexible approach, looking for companies that are either undervalued and/or have good growth potential across different time periods. Over Giles’ tenure the fund has continue to perform well and now has a long enough track record to pass the AlphaQuest screen and move to an Elite Rating.

3. CT European Select

Ben Moore became lead manager on the fund on 1st January 2021, having been co-manager since April 2019 He has maintained the fund’s distinctive process, developed over a number of years, that focuses on industry structure and a company’s competitive position. Ben has a fantastic understanding of the companies in which he invests, and the fund has now passed the AlphaQuest screen and will move from Radar to Rated.

4. M&G Japan

This fund is concentrated, with typically fewer than 50 holdings, which are invested over all market caps. The manager is extremely knowledgeable about the Japanese market and has a strong understanding of the Japanese culture, which is key to successful investing there. The fund has a slight value bias and has outperformed under Carl’s tenure. It moves from Radar to Rated.

5. Ninety One Global Environment

Launched in December 2019, this fund has a unique approach of only investing in companies that are contributing to the decarbonisation of the world economy. The portfolio has complete conviction, with just 20-40 holdings. The proprietary screen that is used to build the investable universe is impressively comprehensive and dynamic to ensure the futureproofing of the strategy. With an impressive track record it now passes AlphaQuest and moves to an Elite Rating.

Three funds moving from Rated to Radar:

1. Allianz China A-Shares

As the name suggests, this fund invests in companies that are listed as A-shares on the stock exchanges of Shanghai or Shenzhen. It targets sustainable growth businesses at reasonable valuations and has 50 to 70 holdings, predominantly in larger companies. New manager, Shao Ping Guan, joined the company earlier this year as head of China equity and became lead manager for this fund on 1 July 2023. With his extensive experience we are happy to move the fund from Rated to Radar.

2. CT UK Equity Income

This fund lost its Elite rating earlier this year when the manager retired. Following a meeting with the new manager, Jeremy Smith, FundCalibre’s research team are now happy to award it an Elite Radar. Jeremy is highly experienced and looks for unloved companies listed with the ability to sustainably grow their dividends. He has a very similar style to the previous manager and there has been a lengthy and successful transition of responsibilities.

3. Royal London Corporate Bond

This fund offers access to a portfolio of predominantly, but not exclusively, investment grade corporate bonds. Royal London Asset Management’s head of fixed income Jonathan Platt stepped down from managing the portfolio on 1 February. Shalin Shah and Matthew Franklin, who have co-managed the fund since October 2017 and January 2022 respectively, will continue co-managing the fund. There will be no changes to the fund’s objective, or the way they select bonds. We are therefore happy to move it to an Elite Radar.

12 funds losing ratings:

1. abrdn Latin American Equity

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. Therefore, the team had to make the decision that it should lose its Rating.

2. Aegon Ethical Cautious Managed

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. It therefore loses its Rating.

3. AXA Framlington UK Select Opportunities

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. This, combined with the poor performance of the fund even at a time when its style had a tailwind, means it must lose its Rating.

4. Baillie Gifford High Yield Bond

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. Therefore, the team had to make the decision that it should lose its Rating.

5. Barings Europe Select Trust

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. It therefore loses its Rating.

6. EdenTree Responsible and Sustainable UK Equity

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. This, combined with the poor performance of the fund, means it must lose its Rating.

7. Jupiter UK Alpha

After a career lasting nearly 40 years, the manager of this fund retired this summer. Therefore, the fund must lose its Rating.

8. Lowland Investment Company

The trust has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. Therefore, the team had to make the decision that it should lose its Rating.

9. Magna EM Growth & Income

The manager now has a track record of more than three years, but the fund has failed to pass AlphaQuest to move to an Elite Rating. It therefore loses its Elite Radar badge.

10. Premier Miton US Smaller Companies

The manager now has a track record of more than three years, but the fund has been very volatile versus its sector and benchmark, and it has failed to pass AlphaQuest to move to an Elite Rating. It therefore loses its Elite Radar badge.

11. T. Rowe Price European Smaller Companies
The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. It therefore loses its Rating.

12. TwentyFour Absolute Return Credit

The fund has had a deteriorating AlphaQuest score and no longer passes our minimum threshold. This, combined with the poor performance of the fund, means it must lose its Rating.

_{Photo by Etienne Girardet on Unsplash}