Funds reporting drastic moves

FE fundinfo crowns Crown Ratings Cooper Investors Legg Mason Martin Currie Real Income Prime Value Emerging Opportunities Yarra Australian Real Asset Securities BT index balanced bt index growth chiodo diversified property development ioof multiseries 90 ioof multiseries 50 Lakehouse Small Companies morningstar global shares schroder global corporate bond Realindex Emerging Markets Dimensional Australian Value Trust IPAC SIS International Share Strategy No 2 Legg Mason Martin Currie Tactical Allocation PIMCO Dynamic Bond First Sentier Investors

10 March 2020
| By Laura Dew |
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There have been nine funds in the latest FE fundinfo Crown Ratings rebalance which have seen a significant five-ranking move from their previous position last September. 

The latest rebalance found there were four funds where their ratings increased from one Crown to five Crowns. 

These were CI Brunswick from Cooper Investors, Legg Mason Martin Currie Real Income, Prime Value Emerging Opportunities and Yarra Australian Real Asset Securities

A spokesperson for Yarra Capital Management said the fund’s performance had been driven by superior stock selection and bottom-up research particularly the fund’s overweight position to transport infrastructure companies and an underweight position to retail REITS. Cooper Investors said the firm had a consistent investment process and the fund had been performing well.

A spokesperson for Legg Mason said: “The key reason for outperformance of the fund during 2019 comes down to our unique portfolio design. 

“The lower-risk nature of listed Real Asset holdings and broad portfolio diversification across assets that are driven by Australia’s very strong population and urbanisation growth rather than trade or cyclical business cycle driven growth, means that our key positions haven’t participated in the broader market sell-offs over the past year.”

There were eight funds which received five Crowns for the first time this year, having not had the required history previously. These were were BT Index Balanced, BT Index Growth, Chiodo Diversified Property Development, IOOF MultiSeries 90, IOOF MultiSeries 50, Lakehouse Small Companies, Morningstar Global Shares and Schroder Global Corporate Bond.

At the other end of the ranking spectrum, there were five funds which fell from a top ranking of five Crowns last year to just one Crown this rebalance. 

The funds which suffered this drastic downgrade were Realindex Emerging Markets, Dimensional Australian Value Trust, IPAC SIS International Share Strategy No 2, Legg Mason Martin Currie Tactical Allocation and PIMCO Dynamic Bond.

Both First Sentier Investors, which owns Realindex, and Dimensional – which had five funds downgraded to one Crown – said the reason for the downgrade was due to the funds’ preference for value assets.

“We are overweight the cheaper companies, sectors and countries and underweight the more expensive ones. As the cheaper has underperformed and the expensive has outperformed, our portfolio has become cheaper relative to the broader market, trading at historically wide valuation discounts versus the market,” a First Sentier spokesperson said.

“The process continues to be based on identifying accounting fundamentals which aim to build a universe of accounting weights rather than market capitalisation weights.”

A spokesperson for Dimensional said: “Nothing has changed in how Dimensional manages these strategies, which have performed as we would expect given the factors they target in a systematic way.

“Each of the equity trusts that FE Crowns have downgraded are seeking diversified exposure to value companies. The value premium has been negative over this period, so as you would expect, the trusts have lagged the broader market.” 

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