Six funds lose Elite Rating

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

Invesco Perpetual High Yield Bond

The fund’s performance, relative to its sector, has been quite strong, but it typically takes a lot more risk than its peers. This has resulted in a declining AlphaQuest score, as well as high alpha volatility.

JPM Multi Asset Income

This fund has now underperformed its sector average over three years, while its volatility continues to be higher than its peers. This has resulted in a rapid deterioration of the AlphaQuest score, both over those three years and since launch in 2009.

Legg Mason US Aggressive Growth

We are concerned that the size of the fund (and others following the same strategy) has inhibited the managers’ ability to continue to generate out-performance. The AlphaQuest score has now fallen below the required level over a number of calendar years.

Liontrust Macro Equity Income

The fund had a poor 2016 in terms of performance and also because it lost one of its co-managers, Jan Luthman, who retired. The AlphaQuest score has fallen below the required level. Alpha volatility also increased, suggesting a lack of consistency. In such a competitive sector, we believe there are other funds more deserving of the Elite Rating.

Liontrust Macro UK Growth

For the same reasons as the Liontrust Macro Equity Income fund, the AlphaQuest score of this fund has fallen below the required level. It is also in a very competitive sector and we believe there are other funds more deserving of the Elite Rating.

Neptune Japan Opportunities

This fund has performed very well in the past but unfortunately, recent performance has been very weak, as the fund manager’s macroeconomic views have failed to materialise. Alpha generation has deteriorated and the AlphaQuest score has fallen below the required level.

View funds that have recently gained an Elite Rating

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.