Morningstar keeps downgrade of Colonial fund
Research houseMorningstarhas maintained a downgrade onColonial First State’sflagship Australian equities fund, the Imputation Fund, following the announcement last week that Simon Shields would replace Greg Perry as the portfolio manager for the fund.
Morningstar confirmed yesterday it would uphold the Imputation Fund’s four star rating after having dropped the fund from a five star ranking immediately after Perry, Colonial First State’s long-time head of Australian equites, announced last month his intention to leave the group in June.
At the time, Morningstar insisted it would review the downgrade after Colonial had announced a replacement to take over Perry’s responsibilities with the Imputation Fund.
The appointment of Shields, who has been a portfolio manager with Colonial First State since 1998, to head up the fund comes after an extensive review by Colonial of both internal and external candidates for the position.
Morningstar’s decision to maintain its lower rating of the Imputation Fund follows a meeting between the research house and Colonial First State’s senior management team, including Shields and chief executive Chris Cuffe.
Morningstar says while Shields has a significant track record as an analyst, it was yet to be seen whether he could emulate Perry’s outstanding stock selections skills.
“Shields has demonstrated sound portfolio management skills but has yet to demonstrate sustained outstanding stock selection expertise,” Morningstar says.
Morningstar’s reaction to Shield’s appointment mirrors that of investment research group Lonsec, which last week announced that it would keep the Imputation Fund on its ‘recommended’ list.
Lonsec had downgraded the fund from ‘highly recommended’ to ‘recommended’ following the announcement of Perry’s impending departure.
But the reaction of both groups was at odds with that of van Eyk Research, which earlier this week lifted a ‘hold’ rating on Colonial First State and gave the imputation fund an ‘A’ rating.
Despite maintaining its downgrade of the Imputation Fund, Morningstar has reconfirmed Colonial First State as a five star rated fund manager, denoting the group’s overall capabilities as ‘excellent quality’ according to the research house.
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