Baillie Gifford Multi Asset Growth, GAM Star Japan Leaders and three of Allianz’s fixed income funds were removed from the Square Mile Academy of Funds, during its May rebalance.
Baillie Gifford Multi Asset Growth lost its ‘A’ rating owing to “disappointing” medium-term performance, according to the research team, which was “not in line with the analysts’ expectations”. It added that a series of team changes have weighed on sentiment, and that Square Mile feel they can “no longer… support the fund’s place within the Academy of Funds”.
GAM Star Japan Leaders also lost its A rating due to a combination of “instability in the management team over recent years” and falling assets under management. According to data from FE Fundinfo, assets have shrunk by 71% over three years, from JPY 51,007.1m to JPY 14,746.4m.
Finally, Allianz Strategic Bond, Allianz Index-Linked Gilt, and Allianz Gilt Yield fund also lost their A ratings, based on the news that lead manager Mike Riddell will leave the firm this month.
Square Mile’s research team said: “Julian Le Beron, CIO of core fixed income at Allianz, will assume immediate control of the funds, bringing a different investment approach. As the funds’ ratings were centred around the analysts’ conviction in Mr Riddell and the process which he built over several years at Allianz, they feel they can no longer support their inclusion in the Academy of Funds.”
Downgrades
A further two funds saw their ratings downgraded, both of which are Premier Miton offerings. The firm’s Multi-Asset Distribution and Multi-Asset Monthly Income funds fell from an AA to an A rating, based on the news that co-head of the multi-manager team David Hambidge will step back from day-to-day fund management responsibilities.
However, for the multi-asset funds which now have Ian Rees as sole manager following Hambidge’s impending departure, Square Mile has decided to retain these ratings. This includes the Multi-Manager Liberation range and the Multi-Asset Global Growth fund.
Square Mile said: “Mr Rees has been at Premier Miton for over 20 years and has overseen multi-manager funds since 2005. Over this time these strategies have been managed using a consistent process, which will continue to be applied.”
See also: Square Mile admits eight to Academy of Funds, drops two
Two further funds in Square Mile’s Academy have retained their ratings despite manager departures. Baillie Gifford Strategic Bond will keep hold of its A rating despite the fact co-portfolio manager Torcail Stewart will leave the firm in August, and the HSBC Global Strategy range will keep its ‘Recommended’ rating, ahead of Kate Morrissey’s departure.
Following the news that Kate Morrissey, Head of World Selection Funds, is to leave HSBC, Square Mile confirmed that the HSBC Global Strategy range, encompassing the Cautious, Conservative, Balanced, Dynamic and Adventurous funds, will retain its Recommended rating.
On Baillie Gifford Strategic Bond, the Square Mile team said it retains conviction based on its “long-established investment process and the highly collegiate team-based management approach”.
With HSBC’s Global Strategy range, it explained that Morrissey had already been reducing her involvement in the day-to-day running of the range since the second half of 2023.
“Mr McLoughlin will now formally transition [from deputy manager] to lead manager, providing continuity in what is very much a team-based approach,” Square Mile’s research team said. “Mr McLoughin has been with the business since 2018, and he will now be appointed head of managed solutions funds. Existing team members Arthur Chevalier and Arnaud Battistella will become deputy managers.
“Having met with Mr McLoughin on several occasions, Square Mile’s analysts are confident in his ability to lead this range, supported by the extensive resources within HSBC’s wider global multi-asset team.”
New ratings
One open-ended fund and one investment company achieved first-time ratings during May.
The Fidelity China Special Situations investment trust, headed up by Dale Nicholls, was described by the team as an “attractive strategy for long-term investors seeking a broad exposure to China”, offering investors access to both listed and unlisted companies.
“The analysts consider the combination of an experienced portfolio manager, supported by a well-resourced analyst team, and an efficacious process within an under-researched opportunity set to be an appealing offering for long-term oriented investors,” Square Mile states.
The second fund to be awarded a new A rating was Capital Group New Perspective, a Luxembourg-domiciled vehicle which focuses on identifying structural long-term trends across markets.
Square Mile said it has a “favourable view” of the fund, adding: “It has a proven track record of delivering excess returns through the cycle and of keeping up when market leadership changes.
“Overall, [the team] believes this fund to be a solid offering for long-term investors looking for a global equity strategy that is managed in a risk-aware manner and seeks to remain competitive across most market conditions.”
This story was written by our sister title, Portfolio Adviser
