Funds lose Elite Rating after latest investment committee review

During our July investment committee review meeting, we decided to remove the Elite Rating from the following five funds, as they no longer pass the AlphaQuest screen.

Aberdeen Asia Pacific Equity and Aberdeen Global Asian Smaller Companies

We believe that these funds became too large to manage. Coupled with the difficulties of a team decision making process, when analysts are spread across five different countries, this has had an impact on performance. With the asset class so much out-of-favour, these funds are in heavy redemption and we do not expect the situation to change any time soon.

JOHCM Japan

The fund has underperformed, despite having a bias towards mid and small cap companies, which have done very well in Japan over the past few years. It is now behind the sector average over one, three and five years.

Legg Mason Global Equity Income

The fund has performed in line with the average fund in the sector over three and five years but its more recent performance has been disappointing. We think there are now better alternatives in this increasingly competitive sector.

M&G UK Inflation Linked Corporate Bond

Whilst the fund has been less volatile than the sector average, due to taking less duration risk, it has substantially underperformed the average index-linked gilt fund despite taking on the extra credit risk associated with corporate bonds. It has also failed in its primary objective to beat inflation since launch.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.