The analyst rating is forward-looking. On an annual basis, Morningstar analysts review and if necessary re-rate the funds on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating.
The analyst rating differs from the firm's backward-looking “star rating”, which assigns 1 to 5 stars based on a fund's past risk- and load-adjusted returns versus category peers.
Analyst Rating Changes October 2015
|Fund||Analyst Rating||Previous Rating||Analysis date|
|BGF Global Opportunities A2||Neutral||--||October 16|
|Henderson Horizon Euro Corp Bond A2 Ac||Under Review||Bronze||July 10|
|Schroder ISF Emerging Markets A Acc||Bronze||Neutral||October 16|
The rating is based on the analyst's conviction in the fund's ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term. If a fund receives a positive rating of Gold, Silver, or Bronze, it means Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years.
1. BGF Global Opportunities A2
There has been a significant amount of change at this fund, in terms of the lead manager’s supporting cast and the fund's process, and we would like to see a prolonged period of stability. The strong long-term performance of this fund is fueled by a period that begins when experienced manager Tom Callan took the helm in April 1999 and extends to April 2009, when the strategy was focused on small- and mid-cap stocks. Its 5.01% annualised return beat the 1.62% loss posted by peers during that time. However, performance has struggled since a mandate change in May 2009, which resulted in the portfolio’s average market cap increasing to $22bn from $2bn in the space of a year.
-- Muna Abu-Habsa, senior manager research analyst
2. Henderson Horizon Euro Corp Bond A2 Acc
Following the news that manager Chris Bullock will be leaving Henderson at the end of 2015, we have placed the fund Under Review. It previously held a Bronze rating. While Stephen Thariyan continues to serve as the manager, he will be joined by Tom Ross in the management of the fund. Ross joined Henderson in 2002 and has co-managed their absolute return credit funds since 2006. They will be supported by Tim Winstone, who joins the team from UBS Global Asset Management in November 2015. We will meet with the team in due course to understand their future plans for the fund.
-- Ashis Dash, CFA, manager research analyst
3. Schroder ISF Emerging Markets A Acc
The fund has been upgrade to Bronze from Neutral. The manager Allan Conway has successfully managed the fund since October 2004 with the help of the group’s emerging markets team. The approach, which was introduced by Conway upon his arrival at Schroders, is a combination of top-down and bottom-up, looking to derive 50% of added value from country allocation and 50% from stock selection. Overall, we believe that the consistency and discipline of the process has helped contain volatility and cushion losses in down markets and this combined with the strength of resources in the team give us confidence that it will deliver consistent long term returns.
-- Lena Tsymbaluk, investment research analyst