The ratings agency says the fund has also undergone fundamental team changes, which may lead to better performance down the road but for now increases the uncertainty of its management.
According to OBSR the fund was rated for its high-conviction style and investors, albeit aware of the significant risks of the strategy, came to expect significant outperformance commensurate with the risks taken.
Despite the fact it has been a difficult period for fundamentally driven investors and those with a strong valuation-based approach, OBSR says the scale and duration of the fund’s underperformance has caused its conviction to wane.
In November Sam Peters was appointed as co-manager on the strategy in alongside Miller and assistant manager Mary Chris Gay.
The agency said: “OBSR sees this as an interesting development for the fund but given the aforementioned performance issues together with this management change, OBSR does not currently have sufficient conviction to maintain the fund’s rating. However, it will continue to monitor its progress with interest.”
The Dublin-domiciled offshore, US equity fund has returned 4.25% over the 12 months to 2 August, underperforming its peer group return of 13.52% and the S&P 500’s gain of 8.65%. FE data shows over three years to 2 August the fund has returned 7.63% compared to a gain of 20.52% in the index.