Funds reborn this Easter

Jonathan Miller, director of manager research ratings at Morningstar UK, takes a look at five funds that have undergone a transition or restructure and show signs of being 'reborn' this Easter.

JPM Emerging Markets

Leon Eidelman (pictured) was formally recognised as lead manager in 2016 and still works alongside the experienced Austin Forey who had run this fund for nearly 20 years.

A further change prior to this saw the emerging markets equity team and the Pacific regional group merged under the leadership of Richard Titherington.

This resulted in increased analytical resources being available to the managers and overall we feel these changes have all been positive for the fund, which holds a Morningstar analyst rating of bronze.

The strategy continues to stick to its long-term, bottom-up approach, focusing on quality growth firms.

It has also had a persistent bias towards sectors positively affected by domestic demand and consumption, rather than areas influenced by commodity prices and currency moves.

Stewart Investors Asia Pacific Leaders

The retirement of Angus Tulloch in 2017 and split from First State Stewart Asia means there are fewer Asia-focused analysts working on this strategy than in the past. But we believe that in the hands of David Gait (pictured) and Sasha Reddy there is continuity.

Avoiding technology companies has been in keeping with the investment process, but this saw underperformance in 2016 and 2017 with returns in the bottom decile each year and over £2bn in outflows during the period. In a challenging 2018 for markets, however, outperformance was a sector-topping 14% ahead of the index.

We like the talented management team and approach meaning the fund holds a Morningstar analyst rating of silver.

Allianz Gilt Yield

Mike Riddell was hired from M&G and took over this fund in November 2015. At that point, the management was brought in-house, having previously been subadvised by PIMCO since 2002.

Riddell's primary levers for adding value are yield-curve and duration positioning. He has actively managed these return drivers while also incorporating top-down themes established by the Allianz GI fixed income teams.

This is a difficult asset class in which to add value, but under Riddell's tenure performance is slightly ahead of the index and most passive options in the sector.

We have confidence in the manager's ability over a full market cycle, warranting a Morningstar analyst rating of bronze.

Alliance Trust

After a comprehensive strategic review, the Board tasked Willis Towers Watson (WTW) in 2017 to manage the trust's assets.

The approach is innovative and brings a hitherto institutionally structured investment approach to the retail market.

WTW seek to identify the most talented fund managers across the world and select eight stocpickers who are tasked with choosing their highest conviction 10-20 stocks.

Through optimisation the portfolio is brought together with little style, geographical or sector bias versus the MSCI All World index.

The concept is that the pure stock picking ability of the eight managers will drive returns. Disposals of Alliance Trust Savings, Alliance Trust Investments, various private equity and mineral rights have also helped to provide renewed focus.

We believe this is a far improved proposition aided by low fees, which is reflected via a Morningstar analyst rating of bronze.

Schroder US Smaller Companies & Schroder US Mid Cap

Jenny Jones, the long-standing manager who established the investment process retired in March this year. Robert Kaynor has taken over as lead manager, having been part of the team for six years and this succession plan was in place during the last few years.

From being appointed director of research to then being named co-manager, he has spent more and more time working with the team, on portfolio construction and vetting ideas from the analysts.

Kaynor is well acquainted with the approach and has helped tweak it during his director of research years. He will also continue to benefit from the same analyst team, consisting of six experienced sector analysts, who have generally stayed the course across the period in which Kaynor’s responsibilities have grown.

There is therefore continuity here, and a plan has been in place for a number of years which help back a Morningstar analyst rating of bronze.