Abrdn ESG Fund Downgraded in Latest Raft of Morningstar Ratings Updates

Invesco
Asian
UK
has
strong
features
including
a
talented
portfolio
manager
within
a
collegiate
team
structure
and
a
truly
active
approach.
The
strategy
is
led
by
William
Lam,
who
has
been
the
lead
manager
here
since
May
2017.
Lam
is
supported
by
the
Henley-based
Asian
&
Emerging
Markets
team,
consisting
of
nine
portfolio
managers
/
analysts,
all
of
whom
have
research
responsibilities.
The
approach
is
unconstrained
and
focuses
on
opportunities
in
unloved
areas,
where
the
manager
believes
the
consensus
is
too
pessimistic.
Lam’s
contrarian
views
and
willingness
to
deviate
from
the
index
has
consistently
generated
alpha,
with
stock
picking
as
the
primary
driver.
Whilst
the
People
score
has
been
maintained
at
Above
Average,
the
Process
score
has
been
upgraded
to
High
from
Above
Average,
reflecting
the
strengths
around
strict
valuation
discipline,
detailed
fundamental
research,
and
skilful
implementation.
As
a
result,
the
Morningstar
Medalist
Rating
for
the
clean
Z
share
class
has
been
upgraded
from
Bronze
to
Silver.

T
Rowe
Price
Asian
ex-Japan
Equity
Q
USD
–
Silver
from
Bronze

Claire
Liang,
CFA

This
strategy
continues
to
benefit
from
a
veteran
manager
who
employs
a
tried-and-tested
investment
approach
and
is
backed
by
sizable
analytical
resources.
Lead
manager
Anh
Lu
brings
28
years
of
experience,
22
of
those
at
T.
Rowe
Price,
and
she
has
led
this
strategy
since
June
2009.
She
has
articulated
solid
investment
cases
during
our
meetings
and
constructed
the
portfolio
in
a
thoughtful
manner.
She
is
supported
by
26
analysts.
After
seeing
an
uptick
in
personnel
turnover
in
the
first
half
of
2022,
the
team
has
shown
better
stability
over
the
past
year,
though
the
lack
of
healthcare
expertise
in
the
team
remains
a
watchpoint.
The
bottom-up
investment
approach
is
quality-growth-focused,
seeking
companies
that
can
deliver
durable
earnings
and
cash
flow
growth
over
a
multiyear
period
and
have
reasonable
valuations.
It
has
been
consistently
applied
and
has
yielded
robust
returns
over
Lu’s
tenure.
We
reiterate
the
strategy’s
Above
Average
People
and
Process
ratings.
Nevertheless,
changes
in
the
competitive
landscape
within
the
Morningstar
Category
have
resulted
in
the
upgrade
of
the
Morningstar
Medalist
Rating
to
Silver
from
Bronze
for
the
clean
share
class
Q
USD.

Downgrades

abrdn
UK
Ethical
Equity
P1
Acc
–
Neutral
from
Bronze

Jack
Fletcher-Price

abrdn
UK
Ethical
is
run
by
a
capable
team,
where
stocks
have
to
pass
a
negative
screen
to
be
eligible
in
the
portfolio.
While
the
approach
has
been
consistently
implemented,
our
conviction
has
waned
in
the
process’
ability
to
overcome
its
restrictive
mandate
and
beat
its
category
index.
The
severe
ethical
criteria
skew
the
universe
significantly,
especially
compared
with
an
increasing
number
of
peers
employing
a
more
pragmatic
approach
to
exclusionary
ethical
investing.

As
a
result,
we
have
moved
the
Process
Pillar
to
Average
from
Above
Average.
While
there
are
no
restrictions
on
the
portfolio’s
relative
sector
weightings,
the
ethical
criteria
guide
positioning
in
certain
areas,
causing
pronounced
structural
underweightings
in
the
oil
and
gas,
healthcare,
mining,
and
tobacco
sectors,
for
example.
Owing
to
these
sector
and
style
biases,
we
have
seen
bouts
of
relative
under-
and
outperformance
manifest.
A
strong
2019
has
been
followed
by
a
difficult
three
and
a
half
years
for
the
strategy,
including
underperformance
versus
the
FTSE
All-Share
Index
by
3.3
and
21.9
percentage
points
over
2021
and
2022,
respectively.

While
we
have
seen
the
strategy
bounce
back
from
periods
like
this
before,
we
have
concerns
about
the
process’
ability
to
add
enough
value
through
stock
selection
alone
to
counter
this
bias
against
the
index.

FSSA
Indian
Subcontinent
I
USD
Inc
–
Silver
from
Gold

FSSA
Regional
India
Fund
Class
A
Acc
–
Silver
from
Gold

Ramanand
Kothari

The
strategy’s
best-in-class
portfolio
manager,
a
solid
investment
team
with
one
of
the
best
investment
cultures
in
the
region,
and
a
distinct,
time-tested
investment
approach
continue
to
earn
a
High
rating
for
the
People
and
Process
Pillars.
Lead
manager
Vinay
Agarwal
is
an
impressive
investor
and
has
been
at
the
helm
since
2012.
He
brings
two
decades
of
investment
experience
and
joined
the
firm
in
2011,
providing
stability
to
investors.
Agarwal
has
consistently
impressed
us
with
his
exceptional
knowledge
of
the
management
teams
of
Indian
companies
and
a
solid
understanding
of
portfolio
holdings
and
the
investable
universe.

The
team
employs
a
bottom-up,
quality-oriented,
conviction-driven
investment
approach
that
has
been
time-tested
and
proven
effective
over
various
market
cycles
with
a
solid
performance
track
record.
It
looks
for
high-quality
companies
with
long-term
growth
prospects
that
are
attractively
valued.
The
most
crucial
aspect
is
the
quality
of
a
company’s
management
team,
followed
by
the
quality
of
the
business
franchise
and
balance
sheet.
Overall,
this
process
is
less
price-sensitive
than
others
and
offers
flexibility.
Agarwal
is
ready
to
pay
a
higher
premium
if
the
company
meet
his
strict
quality
criteria.
While
we
have
maintained
the
strategy’s
People
and
Process
Pillar
ratings
of
High,
the
Morningstar
Medalist
Rating
of
pricier
I
share
classes
has
been
downgraded
to
Silver
from
Gold
due
to
the
changes
in
the
competitive
landscape
within
the
offshore
Indian
Morningstar
category.
Its
other
share
classes
remain
Gold.

Lupus
Alpha
Smaller
German
Champions
CT
–
Bronze
from
Silver

Natalia
Wolfstetter

Lupus
Alpha
Smaller
German
Champions
benefits
from
a
seasoned
manager
with
in-depth
knowledge
of
the
German
small-
and
mid-cap
universe,
who
has
served
investors
well
despite
somewhat
limited
support.
We
also
note
that
Glück
was
made
a
partner
in
the
firm
in
January
2022
and
he
is
invested
in
the
fund,
which
supports
retention
and
alignment.
As
a
result,
we
have
moved
the
People
rating
to
Above
Average
from
Average.
We
value
the
strategy’s
well-tested
approach
and
consistent
execution,
but
concerns
around
capacity
management
lead
to
a
downgrade
of
the
Process
rating
to
Above
Average
from
High.
The
fund
is
one
of
the
largest
in
its
category,
hence
capacity
requires
close
monitoring.
In
that
respect,
the
strategy
could
benefit
from
a
more-formalized
firm-wide
approach
to
capacity
management.

Ninety
One
Global
Strategic
Equity
I
Acc
–
Neutral
from
Silver

Michael
Born

Mark
Breedon,
the
long-time
manager
of
the
Ninety
One
Strategic
Equity
strategy
and
co-head
of
the
4Factor
team,
will
be
retiring
from
the
group
at
the
end
of
2023.
Although
his
replacements
Dan
Hanbury
and
Rhynardt
Roodt
are
well
experienced
and
have
been
embedded
in
the
team
for
some
time
in
the
case
of
Roodt,
Hanbury’s
experience
has
concentrated
more
on
to
the
UK,
and
how
well
the
new
setup
will
work
is
to
be
determined.
With
our
conviction
in
the
process
being
somewhat
anchored
in
the
experience
and
long
tenure
with
the
strategy,
there
are
uncertainties
with
both
team
and
process,
although
there
is
also
potential
for
the
new
setup
to
work
well.
Reflecting
the
uncertainties
that
have
arisen
from
this
change,
the
strategy
will
be
downgraded
from
Silver
to
Neutral
for
the
clean
I
acc
share
class.

Rerated
from
Under
Review

Capital
Group
Global
Allocation
(LUX)
Z
 –
Silver
from
Under
Review

Thomas
DeFauw

Capital
Group
Global
Allocation
impresses
with
its
seasoned
manager
team,
proven
approach,
and
a
parent
company
that
serves
its
investors
exceptionally
well.
Continued
manager
turnover
has
slightly
limited
our
conviction,
however,
leading
to
the
strategy’s
People
Pillar
rating
being
downgraded
to
Above
Average.
This
results
in
a
lowered
Morningstar
Medalist
Rating
of
Silver
for
the
clean
Z
share
class.
The
fund
was
previously
placed
Under
Review
following
the
announcement
that
Paul
Flynn
will
transition
out
of
the
strategy
effective
1
October
2023
and
not
be
replaced.

Fidelity
Global
Financial
Services
I
Acc
–
Neutral
from
Under
Review

Harsh
Jain

Incoming
manager
duo
–
Mac
and
Lee
–
are
yet
to
prove
themselves.
The
retirement
of
the
current
Manager,
Sotiris
Boutsis
whom
we
regarded
well,
is
a
loss
to
the
strategy.
Limited
track
record
and
unproven
execution
skills
of
the
new
manager
result
in
our
reduced
conviction
in
People
as
well
as
Process
scores
to
Average
versus
Above
Average
earlier.
Sotiris,
beginning
August
1st
2023,
is
replaced
by
Muhammad
Elatab
(Mac)
as
the
lead
manager
and
Lee
Sotos
as
Assistant
Portfolio
Manager.
Mac
and
Lee
are
long-standing
members
of
Fidelity’s
financials-sector
team
and
by
virtue
of
their
combined
research
and
co-portfolio
management
experience,
bring
a
complementary
skillset
with
a
continued
support
of
28
financial
and
real
estate
analysts
at
Fidelity.

However,
the
incoming
manager
duo
do
not
have
any
lead
portfolio
management
track
record
to
begin
with
and
are
yet
to
prove
their
portfolio
management
skills.
the
strategy
looks
for
improving
fundamentals
where
the
market
is
not
pricing
improvement,
with
an
emphasis
on
quality
in
terms
of
management
teams,
assets,
and/or
returns.
New
managers
intend
to
follow
a
similar
process,
but
execution
is
untested.
In
absence
of
a
portfolio
management
track-record
in
a
category
that
sees
more
experienced
teams,
we
need
to
observe
the
execution
of
the
strategy
over
a
period
to
gain
a
strong
conviction
as
before.
This
fund
was
previously
placed
Under
Review.

Moved
to
Under
Review

GAM
Star
Credit
Opportunities
(USD)
Instl
I
Inc
–
Under
Review
from
Neutral

Mara
Dobrescu,
CFA

In
August
2023,
the
proposed
sale
of
this
strategy’s
parent
company,
GAM,
to
U.K.-based
asset
manager
Liontrust
was
stymied
in
a
high-profile
boardroom
fight,
leading
to
the
ouster
of
the
board
of
directors
and
planned
leadership
changes.
A
concurrent
plan
emerged,
championed
by
a
group
of
activist
investors,
to
restore
GAM’s
profitability
by
enacting
significant
cost-cutting
measures,
a
rationalization
of
the
fund
range,
and
reduced
staff-compensation
targets
in
an
attempt
to
restore
profitability.
While
the
situation
is
still
in
flux,
these
events
increase
uncertainty
about
the
firm’s
strategic
direction,
and
we
believe
there
are
critical
challenges
ahead
in
GAM’s
path
to
recovery.

These
events
have
prompted
us
to
lower
GAM’s
Parent
rating
to
Low
from
Below
Average.
This
strategy,
subadvised
by
third-party
manager
Atlanti
and
distributed
by
GAM,
is
to
some
extent
insulated
from
the
turmoil
for
now.
Its
portfolio
managers
have
extensive
autonomy
to
carry
out
the
investment
process,
and
their
compensation
is
not
dependent
on
GAM’s
financial
situation.
On
the
other
hand,
if
the
financial
pressure
and
outflows
incurred
by
GAM
extended
to
the
subadvisor
level,
there
could
be
cause
for
concern.
We
are
thus
placing
the
strategy’s
rating
Under
Review
for
now
and
will
revise
our
take
as
we
gain
more
clarity
on
the
situation.
Previously,
the
Morningstar
Medalist
Rating
for
the
clean
share
class
was
Neutral,
with
the
most
expensive
share
class
rated
Negative.

Janus
Henderson
Continental
European
I2
EUR
–
Under
Review
from
Bronze

Janus
Henderson
European
Selected
Opportunities
I
Acc
–
Under
Review
from
Bronze

Michael
Born

On
August
31,
2023,
Janus
Henderson
announced
that
John
Bennett,
lead
manager
on
the
Continental
European,
European
Focus,
and
European
Select
strategies,
would
be
retiring
at
the
end
of
August
2024.
Bennett
has
been
with
Janus
Henderson
for
12
years
of
his
43-year-long
career,
being
named
portfolio
manager
in
2010,
and
will
continue
to
work
with
the
team
over
the
next
12
months
to
ensure
a
smooth
transition.
His
replacements
will
be
Tom
O’Hara
and
Tom
Lemaigre,
who
have
worked
closely
with
Bennett
for
five
years
now,
being
named
as
co-portfolio
managers
in
2020
(O’Hara)
and
2022
(Lemaigre).
As
a
result
of
this
announcement,
we
have
placed
these
strategies
under
review
while
we
evaluate
the
change
to
the
investment
team.
Previously
the
ratings
for
Janus
Henderson
Continental
European
ranged
from
Silver
to
Neutral,
depending
on
fees,
with
the
clean
I2
EUR
share
class
rated
Bronze.
While
the
ratings
for
Janus
Henderson
European
Selected
Opportunities
ranged
from
Silver
to
Bronze,
depending
on
fees,
with
the
clean
I
Acc
share
class
rated
Silver.

TCW
Core
Plus
Bond
RU
–
Under
Review
from
Silver

Brian
Moriarty

TCW
has
announced
big
changes
to
its
fixed
income
management
ranks,
the
most
significant
of
which
are
that
generalist
portfolio
managers
Laird
Landmann
and
Stephen
Kane
will
retire
at
the
end
of
2023
and
2024,
respectively.
As
Landmann
and
Kane
help
oversee
the
majority
of
TCW’s
$210
billion
in
assets
under
management,
Morningstar
has
placed
their
strategies
Under
Review.
This
dual
retirement
announcement
is
not
the
firm’s
only
recent
brush
with
major
leadership
changes.
Former
CIO
Tad
Rivelle
retired
at
the
end
of
2021,
while
former
CEO
David
Lippman
followed
him
one
year
later.
Stephen
Kane
and
Bryan
Whalen
inherited
Rivelle’s
mantle
as
co-CIOs,
while
Katie
Koch
joined
in
February
2023
to
replace
David
Lippman
as
CEO.
As
part
of
the
most
recent
announcement,
Kane
will
give
up
his
co-CIO
title
at
the
end
of
2023
but
remain
as
a
generalist
portfolio
manager
through
2024.
Those
earlier
departures,
particularly
Rivelle’s,
were
unexpected
and
set
off
a
domino
effect
that
can
be
seen
today.

It’s
clear
that
the
firm
is
making
room
for
the
next
generation
of
fixed-income
leaders.
In
addition
to
Landmann
and
Kane’s
future
retirements,
TCW
also
announced
a
slew
of
promotions
that
take
effect
immediately.
Ruben
Hovhannisyan
and
Jerry
Cudzil
are
now
generalist
portfolio
managers.
Hovhannisyan
has
worked
closely
with
Landmann,
Kane,
and
Whalen,
while
Jerry
Cudzil
has
served
as
co-head
of
global
credit
and
head
of
credit
trading.
Meanwhile,
Steve
Purdy,
co-head
of
global
credit
and
head
of
credit
research,
has
joined
the
management
team
of
Metropolitan
West
Unconstrained
Bond.
Four
other
senior
research
professionals
have
been
promoted
to
senior
portfolio
manager
(a
newly
created
role)
and
will
form
a
U.S.
fixed-income
investment
committee.
It’s
not
yet
clear
how
this
new
committee
will
work
with
or
supplement
the
generalists,
as
they
have
historically
set
risk
budgets
and
outlooks,
work
that
is
often
done
by
committees
at
competing
firms.
Previously,
the
Morningstar
Medalist
Rating
ranged
from
Gold
to
Neutral,
with
the
clean
RU
share
class
rated
Silver.

UBS
Factor
MSCI
USA
Quality
ESG
ECITS
ETF
(USD)
A
DIS
–
Under
Review
from
Silver

Monica
Calay

We
are
initiating
a
review
of
the
UBS
Factor
MSCI
USA
Quality
ESG
UCITS
ETF
owing
to
recent
changes
in
its
benchmark
index.
The
fund
has
transitioned
from
tracking
the
MSCI
USA
Quality
Total
Return
(Net)
Index
to
the
MSCI
USA
Quality
ESG
Low
Carbon
Select
Index.
As
a
result,
we
have
not
previously
rated
any
funds
that
follow
this
new
index,
prompting
the
need
for
a
comprehensive
assessment.
The
decision
to
shift
to
the
MSCI
USA
Quality
ESG
Low
Carbon
Select
Index
introduces
a
material
change
in
the
fund’s
investment
strategy.
The
new
index’s
tracking
error,
relative
to
the
parent
universe
–
the
MSCI
USA
–
has
shown
to
be
significantly
higher
than
that
of
the
old
index.

Given
the
deviation
in
tracking
error,
we
aim
to
conduct
an
in-depth
analysis
to
understand
the
implications
of
this
transition.
Our
review
will
encompass
evaluating
the
fund’s
Process
and
People
Pillars.
During
this
period
of
review,
we
recommend
investors
exercise
caution
and
more
closely
monitor
the
fund’s
performance.
We
will
shortly
provide
further
updates
and
recommendations
based
on
our
findings.
Previously
the
fund
was
rated
Silver.

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