Welcome to the Morningstar Manager Check-up, I'm Holly Black. With me in the studio is
Jon Miller, he's Head of Fund Research for Morningstar. Hi.
Hello Holly. So you've been focusing on emerging markets
funds this month. What's been coming on to your radar?
Yes, a few funds that we've looked at where we've maintained some ratings and even one
we can talk about bit later on, an upgrade. Maybe we'll start with Stewart Investors Global
Emerging Market Leaders. So they have a team that’s been in place for quite a while,
well versed in what they do although there has been a fund manager added a few years
ago called Ashish Swarup who joined from Fidelity. And there what the team are looking for are
companies that they invest in where there is management integrity, pricing power, franchise
strength. So these are the real bits of DNA they look for in businesses as part of their
research process. And you've maintained a Silver rating on that,
so what keeps it at that for you? So the consistency of the team even though
Ashish was a new addition that’s important, we feel the process is embedded in what they
do. That hasn’t shifted since he's joined and also performance has carried on as we’d
expect. When I mean performance, it means when the approach works and when it doesn’t.
So what they look for in firms actually leans them towards a large consumer staples rating
and very little in technology where there is very high aggressive growth. So the fund
has underperformed in times when, in emerging markets tech was racing away like it did a
couple of years ago. And then bounced back heavily when tech was less in vogue. So we
think a lot of things are coming together across the board and that’s enough to sustain
a Silver rating. And what else do we like in the emerging market
space? So maybe we just go focus on Asia dedicated
fund, Schroder Asian Alpha Plus, that’s run by Matthew Dobbs. So he's actually running
investment trust in that space that replicates the portfolio pretty much, for about 20 years
or so and the funds been in existence for about 12 years. But really he's got a long
tenure in the region, but he's backed by about 40 analysts at Schroders that are based out
there. And all their fundamental work and stock work they look out is important to how
he helps them shape the portfolio. And what about the performance and cost pillars?
So performance there has been pretty much outstanding over the long term, price is reasonable
and what we call growth at a reasonable price is what he's looking for. So it's the good
things in terms of the growth story in Asia that he's trying to harness, buy at the right
price. He's underweight China, doesn’t particularly like the real estate and bank sector, prefers
some more stable firms in Hong Kong to access the Chinese market. So over the long term
he's delivered and a Silver rating is a strong reflection of our views there.
And you said you had an upgrade this month as well?
So there we move to a dedicated China fund. So Fidelity China Focus and a bit different
of the Asia growth story I talked about just before. Actually Fidelity China Focus is managed
by Jing Ning and there she's got more of a value bias which you might think doesn’t
really happen too much in these sort of markets where growth is the big story. But she's done
a very good job having joined from BlackRock about six years ago, it's not necessarily
easy having a transition. I don’t think that five and a bit years on has been part
of us feeling more comfortable with her and contributing to increasing the rating from
Bronze to Silver. And what about performance particularly with
the US trade war impacting on China. So I mean she's looking at China as I said
from a value side. So actually she's picking parts of the market that might be unloved.
So recent performance has been a little bit mixed but what we see is the portfolio construction
that we like in that you can be a value investor and deviate very heavily. She's got some slight
kind of buffers in place, but we think that’s enough to still express herself as an active
manager and ultimately over the long term this has still been to be able to deliver.
So for some people a bit different in China and what we quite like it and that’s why
the Silver rating was put in place. Thank you.
Pleasure. And thanks for joining us.