In its most recent analysis of fund ratings, Morningstar removed the gold rating for Alastair Mundy’s Investec UK Special Situations Fund after analysts raised concerns over a recent reassessment of the approach to its management.
It is now ranked as silver after medium-term returns were judged “lacklustre” when put against other value-orientated funds, but its long-term performance remained good.
Analyst Simon Dorricot said: “The lack of ideas passing the screening process and the manager’s valuation criteria, have been the cause of this together with some stock selection issues”.
Stock selection and the lack of ideas passing screening process were also reasons behind Dorricot’s downgrade of Temple Bar Investment Trust, also managed by Mundy, from gold to silver.
However, the long-term performance and performance of both funds’ managers was still considered good.
The Kames Strategic Bond Fund has been downgraded to bronze after losing its silver badge.
Analyst Ashis Dash said the fund had struggled to beat its Investment Association (IA) peer group, managing to do so in less than 10% of the rolling three-year periods since 2010, and returns had dropped to the bottom half of its Morningstar category.
Dash added: “The fund’s underweight duration, versus peers, held since 2011 has broadly detracted over the years.
“Meanwhile, contributions from other return drivers such as asset allocation, sector and credit selection, haven’t been able to totally offset this.
“That’s disappointing given the multiple performance drivers available to the managers, and somewhat reduces our conviction on the quality of execution of the investment process.”
