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BlackRock Smaller Companies Trust gains Square Mile rating

Janus Henderson and Matthews Asia funds have ratings removed

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BlackRock’s UK Smaller Companies fund and Smaller Companies Trust have both been awarded an ‘A’ rating in Square Mile’s latest fund round up.

Both vehicles are managed by Roland Arnold, who seeks to invest in high quality, growing businesses.

Square Mile analysts said they consider Arnold to be a “pragmatic” investor who has proven to be adept in adjusting the risk profile of the strategy underlying both the fund and the trust at appropriate times during the market cycle.

The £633.1m BlackRock Smaller Companies Trust currently trades at an 11.7% discount to net asset value (NAV), according to the AIC.

See also: £95.3bn underperforming ‘dog’ fund assets leap 106%

Analysts at Square Mile conducted 66 interviews with investment professionals from 37 asset management groups during February. 

Elsewhere, the Janus Henderson Global Equity Income fund has lost its A rating after a period of “challenged” performance.

According to FE Fundinfo, the strategy has returned 43.5% over the last five years compared to the IA Global Equity Income average 52.3%.

The analysts noted that the fund has always taken an approach that is highly defensive, non-cyclical and with a focus on income.

“However, its total return profile has not met [analyst] expectations and [Square Mile] no longer have sufficient conviction in the strategy to justify its continued inclusion in the Academy of Funds,” they said.

Matthews Asia Pacific Tiger fund has also been stripped of its A rating, having previously had its rating suspended in December following the departure of manager Sharat Shroff.

Shroff was replaced by Inbok Song as lead manager, who works alongside the firm’s CIO Sean Taylor.

The Square Mile analysts said: “Ms Song and Mr Taylor are in the process of re-invigorating the strategy, which includes adjusting the portfolio construction process. Although Square Mile’s analysts believe this to be a sensible course of action, as yet it is unproven.”

Schroder US Equity Income Maximiser and Schroder Income Maximiser funds have both retained their A ratings, despite the recent departure of manager Mike Hodgson.

Co-manager Scott Thomson was appointed as head of the team. Square Mile said its analysts have a high regard for Thomson and confirmed the two funds’ ratings would remain unchanged.

Similarly, UBAM Positive Impact Equity fund has retained its ‘Responsible A’ rating despite senior portfolio manager Rupert Welchman’s decision to exit the firm in April.

Despite his departure, the Square Mile analysts believe the team is well resourced and they have a high regard for the strong team-based process underpinning the strategy.

This article was written for our sister title Portfolio Adviser

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