Schroders is reviewing the fees on the US Small & Mid Cap Equity and US Smaller Companies funds, with Morningstar labelling the pricing "high" and posing "a structural disadvantage".
The $2.5bn Schroder ISF US Small & Mid Cap Equity fund and the £833m Schroder ISF US Smaller Companies fund, both managed by Jenny Jones since 2004 and 2002 respectively, have been downgraded by Morningstar from an analyst rating of Silver to Bronze.
Morningstar's Lena Tsymbaluk, analyst, manager research, said the high fees were of greater concern than the appointment of Robert Kaynor as co-manager alongside Jones as part of the firm's long-term succession planning.
"[The funds continue] to benefit from a seasoned investor, Jenny Jones," Tsymbaluk said.
"In January 2018, Robert Kaynor was appointed co-manager alongside Jones as part of their long-term succession planning. Kaynor has over 20 years of investment experience and has been part of the team for five years as director of research.
"While there is some uncertainty in terms of how much influence Kaynor is going to have on portfolios as co-manager, it is unlikely there will be a wholesale change. We also draw comfort from Jones still being actively involved with the strategy, and our qualitative assessment doesn't currently raise any red flags.
"However, the fund's fees are high and represent a structural disadvantage compared with peers. We therefore downgrade the fund's Morningstar Analyst Rating to Bronze."
A Schroders spokesperson said: "We regularly review the pricing of our fund range and are currently reviewing the fees of Schroder ISF US Small & Mid Cap Equity and Schroder ISF US Smaller Companies."
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