We
initiate
coverage
on
M&G
Japan
with
Above
Average
People
and
Average
Process
Pillars.
Carl
Vine
leads
the
strategy,
having
joined
M&G
in
2019
as
co-Head
of
Asia
Pacific
equities.
Both
Vine
and
deputy
manager
David
Perrett
join
from
Port
Meadow
Capital
Management,
a
pan-Asian
long-short
equity
focused
hedge
fund
they
founded
in
2014.
Almost
the
entirety
of
their
experience
has
been
in
the
pan[1]Asian
long/short
space,
and
so
this
Japan
long-only
mandate
represents
something
of
a
change
in
tack.
However,
their
amassed
research
catalogue
and
experience
remain
advantageous
here.
The
distinctive
process
has
elements
of
intangibility,
therefore
limiting
conviction
during
its
infancy
as
a
standalone,
long-only
proposition.
Since
Vine
took
the
reins
at
the
beginning
of
October
2019
to
31st
October
2023,
performance
has
been
impressive,
returning
7.5%
annualized
vs
2.8%
and
2.4%
for
the
Morningstar
Japan
TME
index
and
the
Morningstar
Japan
large-cap
peer
group,
respectively.
Given
the
fund
is
relatively
unconstrained
in
nature
with
an
element
of
benchmark
awareness,
we
hope
the
strategy
can
deliver
consistent
rolling
periods
of
outperformance
going
forward.
Manulife
GF
Sustainable
Asia
Equity
I
–
Bronze
Hunter
Beaudoin
We
initiate
coverage
of
Manulife
GF
Sustainable
Asia
Equity
with
a
People
rating
of
Average
and
a
Process
rating
of
Above
Average,
resulting
in
a
Morningstar
Medalist
Rating
of
Bronze
for
its
I
share
classes
and
Neutral
for
its
AA
share
class.
Lead
manager
Kenglin
Tan
sports
23
years
of
investment
experience
and
has
helmed
this
strategy
since
April
2016.
Although
she
has
demonstrated
deep
knowledge
of
her
portfolios
at
our
review
meetings,
we
have
concerns
regarding
her
workload.
She
manages
seven
other
mandates
investing
in
the
Asia
Pacific
region
and
has
absorbed
substantial
stock
coverage
following
a
key
analyst
departure
in
mid-2022.
The
growth-at-a-reasonable-price,
bottom-up
investment
process
is
well-structured,
and
Tan
invests
with
conviction.
Indeed,
the
40-50
holding
portfolio
has
been
more
active
than
peers
and
has
sported
a
tilt
toward
smaller-cap
stocks
as
Tan
hunts
down
the
market
cap
spectrum.
The
strategy
was
repurposed
to
a
sustainable
mandate
and
classified
as
Article
8
under
EU
SFDR
in
July
2022,
but
there
was
minimal
effect
on
the
portfolio
due
to
the
investment
framework’s
existing
inclusion
of
ESG
factors
and
Tan’s
focus
on
management
quality
in
stock
selection.
The
clearly
defined
approach
and
Tan’s
diligent
application
of
the
framework
provide
the
strategy
an
edge.
Polar
Capital
European
Ex
UK
Income
I
Acc
–
Silver
Jack
Fletcher-Price
We
initiate
coverage
on
Polar
Capital
European
ex
UK
Income
with
Above
Average
People
and
Process
Pillars.
Lead
manager
Nick
Davis
has
proven
himself
a
stoic
practitioner
of
the
strategy
he
architected,
characterized
by
its
uncompromising
approach
to
quality,
value,
and
income.
Davis’
unique
pedigree,
having
worked
alongside
highly
regarded
quality
and
contrarian
managers
alike
at
his
previous
shop,
feeds
conviction
here.
The
smaller
team
doesn’t
quell
our
conviction,
given
this
is
the
only
strategy
they
work
on.
Maintaining
competition
for
capital
within
the
portfolio
is
deemed
imperative,
and
as
such
the
portfolio
resembles
a
higher
conviction
collection
of
names
than
many
value
oriented
peers.
An
outcome
of
the
quality
focus
and
longer-term
mindset
is
the
atypical
sector
exposure
compared
to
income
peers;
utilities,
energy,
and
banks
all
feature
less.
Investors
can
therefore
expect
the
returns
profile
to
be
differentiated
from
quality
and
value
peers
alike,
and
while
there
is
the
potential
to
be
left
behind
in
frothy
markets,
they
should
continue
to
be
rewarded
with
stronger
risk-adjusted
returns
over
the
cycle.
Upgrades
BlackRock
Systematic
Sustainable
Global
SmallCap
D2
–
Bronze
from
Neutral
Ramanand
Kothari
The
BGF
Global
SmallCap
strategy
benefits
from
the
firm’s
strong
leadership
and
extensive
resources.
The
consistent
application
of
its
alpha-driven
quantitative
stock
selection
process
in
recent
years
has
upgraded
its
People
and
Process
Pillar
ratings
to
Above
Average
and
Average
from
Average
and
Below
Average,
respectively.
The
Systematic
Active
Equity
team
at
BlackRock,
managing
the
strategy
since
May
2017,
is
led
by
co-managers
Kevin
Franklin,
Raffaele
Savi,
and
Richard
Mathieson,
providing
technical
leadership
and
stability.
Despite
its
large
size,
the
team,
comprising
90
professionals
skilled
in
data
analytics,
natural
language
processing,
and
machine
learning,
has
maintained
commendable
stability.
The
strategy’s
unique
quantitative
process,
combining
traditional
and
nonstandard
signals
like
machine
learning,
has
stabilized
and
consistently
delivered
results.
While
global
equities
are
a
relatively
new
foray,
the
strategy’s
performance
has
notably
improved
under
their
leadership,
earning
a
Morningstar
Medalist
Rating
of
Bronze
for
its
clean
D
share
class,
up
from
Neutral.
iShares
ESG
Overseas
Corporate
Bond
Index
(UK)
D
Acc
–
Bronze
from
Neutral
Jose
Garcia
Zarate
This
fund
is
marketed
for
UK-based
investors
as
a
complement
to
domestic
corporate
bond
exposure.
The
fund
tracks
an
index
that
provides
exposure
to
the
global
market
of
corporate
bonds
but
excludes
those
denominated
in
UK
Pound.
The
fund
switched
from
mainstream
to
ESG
in
2022.
Its
low
cost
is
the
key
positive
factor
and
the
reason
why
this
strategy
may
offer
returns
above
the
category
average
over
the
long-run.
This
has
translated
into
a
Morningstar
Medalist
Rating
of
Bronze
at
this
review.
iShares
EURO
STOXX
Mid
ETF
EUR
Dist
–
Bronze
from
Neutral
Kenneth
Lamont
Despite
being
classified
as
a
mid-cap
fund,
this
exchange-traded
fund
has
two
thirds
of
exposure
to
large
caps
and,
as
such,
is
not
a
rounded
and
representative
investment
proposition
for
those
seeking
pure
passive
exposure
to
the
mid-cap
segment.
The
fund
holds
stocks
taken
from
the
middle
section
of
a
universe
dominated
by
large
caps,
which
results
in
significant
large-cap
exposure.
It’s
strong
bias
toward
large
caps
means
investors
looking
for
eurozone
mid-cap
exposure
may
be
better
served
elsewhere.
However,
the
fund’s
diversification
and
relatively
low
fee
remain
strengths.
iShares
Global
Corp
Bond
ETF
USD
Dist
–
Bronze
from
Neutral
Jose
Garcia
Zarate
This
passive
fund
useful
instrument
to
gain
broad
exposure
to
the
global
market
of
corporate
bonds
issued
from
developed
countries.
This
remains
a
market
exposure
where
experienced
active
management
can
have
an
edge.
However,
investors
seeking
an
efficiently
managed
and
low-cost
passive
strategy
for
this
bond
market
exposure
will
find
this
ETF
fits
the
bill.
Its
low
cost
underpins
its
Morningstar
Medalist
Rating
of
Bronze
at
this
review.
Janus
Henderson
Horizon
Japanese
Smaller
Companies
H2
USD
–
Bronze
from
Neutral
Ronald
van
Genderen,
CFA
Janus
Henderson
Horizon
Japan
Smaller
Companies
has
been
in
the
strong
hands
of
Yunyoung
Lee
since
his
arrival
at
Janus
Henderson
in
May
2005.
He
is
one
of
the
longest-tenured
managers
in
the
Japan
small/mid-cap
equity
Morningstar
Category
and
boasts
almost
three
decades
of
experience,
of
which
the
largest
part
has
been
geared
toward
this
space.
He
is
an
asset
to
this
strategy,
and
we
hold
him
in
high
regard.
He
stands
out
in
terms
of
experience
and
tenure
on
this
strategy,
but
most
importantly,
his
capabilities
have
proved
to
provide
this
strategy
with
an
edge.
The
well-experienced
Yusuke
Suzuki
supports
Lee
as
a
dedicated
analyst
since
July
2016.
This
keeps
the
team
size
very
compact,
and
it
remains
clear
that
Lee
is
the
sole
decision-maker.
Therefore,
key-person
risk
and
lightly
staffed
support
are
issues
that
still
lurk.
Despite
these
reservations
we
have
increased
our
conviction
in
Lee,
which
drives
an
increase
of
the
People
Pillar
rating
to
Above
Average
from
Average.
Meanwhile,
the
Process
Pillar
rating
is
maintained
at
Average.
This
leads
to
an
upgrade
of
the
Morningstar
Medalist
Rating
to
Bronze
from
Neutral
for
the
cheaper
share
classes,
including
the
clean
H
share
classes.
More
expensive
ones
retain
their
Neutral
rating.
Moneta
Multi
Caps
RD
–
Gold
from
Silver
Mathieu
Caquineau
Moneta
Multi
Caps
benefits
from
the
strong
investment
expertise
of
its
lead
manager,
Romain
Burnand.
He
has
been
instrumental
in
building
the
strategy’s
outstanding
long-term
track
record
since
2006.
As
the
firm’s
co-founder,
Burnand
has
also
fostered
a
culture
of
analytical
excellence
and
meritocracy
at
Moneta
Asset
Management.
Moneta’s
research
team
is
well-resourced
and
has
in-depth
knowledge
of
the
French
equity
universe.
The
investment
process
has
been
expertly
executed
over
time.
This
high[1]conviction
and
valuation-sensitive
approach
allows
investments
in
all
market
caps
with
a
strong
focus
on
bottom-up
stock
selection
rooted
in
fundamental
research.
The
overweighting
in
small
and
mid-caps
has
hurt
the
fund
recently
but
the
long-term
record
remains
very
favorable,
and
the
strategy
has
still
plenty
of
merits
for
patient
investors.
We
reiterate
the
strategy’s
High
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
Gold
from
Silver
for
the
RD
share
class.
More
expensive
share
classes
obtain
a
Silver
rating.
Nordea
1
–
European
High
Yield
Bond
BC
EUR
–
Bronze
from
Neutral
Thomas
DeFauw
This
fund
earns
its
spot
among
our
favorites
in
the
peer
group.
While
the
team’s
market
insights
and
strong
credit
selection
skills
have
long
been
apparent,
our
conviction
in
the
process
was
previously
held
in
check
by
concerns
that
its
portfolio
risk
analysis
tools,
particularly
for
liquidity
analysis,
did
not
seem
to
be
in
line
with
industry
peers.
These
have
improved
in
recent
years,
however.
As
a
result,
we’ve
upgraded
the
strategy’s
Process
Pillar
rating
to
Above
Average
from
Average.
Despite
a
recent
manager
departure,
the
team
behind
this
strategy
remains
topnotch.
The
cohesive
portfolio
manager
team
of
four
believes
in
decisions
by
consensus.
Of
the
managers,
Sandro
Näf
and
Torben
Skødeberg
have
steered
this
fund
since
its
inception
in
2002.
The
managers
are
further
supported
by
a
strong
and
sizable
team
dedicated
to
leveraged
finance,
including
a
team
of
23
credit
analysts.
The
People
Pillar
rating
remains
at
High.
Templeton
Asian
Smaller
Companies
W
Acc
USD
–
Silver
from
Bronze
Claire
Liang
Templeton
Asian
Smaller
Companies
is
in
good
hands
with
Vikas
Chiranewal,
who
is
a
veteran
small-cap
investor
with
19
years
of
investment
experience.
He
had
been
doing
the
heavy
lifting
on
this
strategy
since
its
inception
and
has
been
serving
as
the
de
facto
lead
manager
here
since
October
2015.
He
has
been
joined
by
comanager
Krzysztof
Musialik
since
2018,
though
Musialik
has
been
dedicating
half
of
his
time
to
Templeton
Eastern
Europe
since
August
2021.
Nonetheless,
Chiranewal’s
expertise,
dedication,
and
investment
savvy
instill
our
confidence.
Meanwhile,
we
have
gained
conviction
in
the
managers’
execution
of
their
quality-focused
investment
process,
which
homes
in
on
well-managed
companies
with
durable
earnings
power.
The
duo
also
pays
great
attention
to
a
company’s
financial
strength
and
corporate
governance
to
minimize
idiosyncratic
risks,
which
we
think
is
essential
in
investing
in
small
caps.
With
an
upgraded
Process
rating
to
Above
Average
from
Average,
the
fund’s
clean
W
share
classes
earn
an
upgrade
to
Silver
from
Bronze.
Templeton
Emerging
Markets
Smaller
Companies
W
Acc
USD
–
Bronze
from
Neutral
Claire
Liang
Templeton
Emerging
Markets
Smaller
Companies
is
in
good
hands
of
Vikas
Chiranewal,
who
is
a
veteran
small-cap
investor
with
19
years
of
investment
experience.
He
had
been
doing
the
heavy
lifting
on
this
strategy
since
its
inception
and
has
been
serving
as
the
de
facto
lead
manager
here
since
October
2015.
He
has
been
joined
by
comanager
Krzysztof
Musialik
since
2018,
though
Musialik
has
been
dedicating
half
of
his
time
to
Templeton
Eastern
Europe
since
August
2021.
Nonetheless,
Chiranewal’s
expertise,
dedication,
and
investment
savvy
instill
our
confidence.
Meanwhile,
we
have
gained
conviction
in
the
managers’
execution
of
their
quality-focused
investment
process,
which
homes
in
on
well-managed
companies
with
durable
earnings
power.
The
duo
also
pays
great
attention
to
a
company’s
financial
strength
and
corporate
governance
to
minimize
idiosyncratic
risks,
which
we
think
is
essential
in
investing
in
small
caps.
With
an
upgraded
Process
rating
to
Above
Average
from
Average,
the
fund’s
clean
W
share
classes
earn
an
upgrade
to
Bronze
from
Neutral.
Downgrades
x
Rerated
from
Under
Review
x
x
Moved
to
Under
Review
x
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