As part of its latest Academy of Funds review, Square Mile analysts downgraded the fund despite acknowledging that “many of the strategy’s strengths remain”, citing the importance of Bond’s role as “key architect”. Analysts also noted concern over the firm’s ongoing integration of the BMO GAM business, which could result in further team changes.
Somerset Capital Management Global Emerging Markets fund lost its AA rating in the review, with analysts referencing “challenges over recent years which had resulted in lacklustre returns” leading to its conviction in the fund falling.
This was despite the recruitment of Asian and China fund managers and analysts, as well as a new head of research.
In response to the rating loss, Joshua Ausden, head of UK distribution at Somerset Capital Management, told Investment Week: “Emerging markets have had to contend with a lot of volatility over the past few months but this has created a huge number of opportunities for bottom-up, fundamental stockpickers.
“It is early days but the tide does appear to be turning in China, where the easing of Covid restrictions and the onset of stimulus are easing concerns over growth. China is home to many high quality companies with significant growth potential, and unusually we are able to invest in these businesses at the moment at rock bottom prices.”
Fidelity Moneybuilder Income retained its A rating following both a change of name and investment policy, but Square Mile acknowledged the philosophy and investment team of the now Fidelity Sustainable Moneybuilder Income fund remained unchanged, and retained its rating.
Fundsmith Equity fund retained its own AAA rating, although concerns were raised around reports the fund has been served a Section 166 notice by the FCA but as details are not available, Square Mile said it was unable to assess ramifications on the rating.
It has said it will continue to monitor the fund.
Square Mile also awarded a new A rating to the Sarasin Responsible Corporate Bond fund, highlighting the fund’s “barbell approach” to optimise investment returns alongside strong ESG credentials.
Analysts added: “By combining lower beta impact themes with higher beta credit exposure within industrial and financial sectors, the fund has the potential of delivering positive social and environmental outcomes while maintaining the risk and return characteristics of the sterling corporate bond market.”