Following the analyst meeting two weeks ago, the ratings agency demoted M&G American from a Bronze to a Neutral rating while its Global Leaders Fund was taken from Silver to Bronze.
In both cases, Morningstar OBSR noted weaker stock selection over recent years and more team changes than it would ideally like to have seen.
Prudent
The note said: "Consequently Morningstar OBSR believes it is prudent to lower the fund’s rating… reflecting the reduction in its overall conviction."
Schroders saw Jenny Jones’ US Mid Cap and US Smaller Companies funds downgraded, both moving from Gold to Silver ratings.
Her offshore equivalents, the Schroder ISF US Small and Mid-Cap and ISF US Smaller Companies products received the same treatment.
Morningstar OBSR said while manager Jones had been in situ for some time, other team changes over recent years, combined with an overly defensive positioning and disappointing stock selection had held back the funds.
This had led to "a deterioration of the fund’s risk-return profile" with a Silver rating deemed "a better reflection of its conviction in the fund at the current time."
It wasn’t all bad news for Schroders though, with Nick Kirrage and Kevin Murphy's Recovery Fund being promoted from Bronze to Silver, praised for their highly disciplined execution of their value strategy, which has led to "a performance profile that has rewarded long-term investors and is consistent with their approach".
New ratings
Meanwhile, new ratings of Bronze have been awarded to the following funds: BlackRock Corporate Bond, Natixis' Loomis Sayles US Equity Leaders, Old Mutual Equity Income, Threadneedle UK Growth & Income.
In the global funds sphere, Nordea-1 North American Value was downgraded from Bronze to Neutral, having been placed 'under review' following a change in its management and investment process.
The statement from Morningstar OBSR explained: "Prior to being placed under review the fund was rated Bronze. The new sub-adviser, The London Company, a firm based in the US, will follow a value approach with a focus on downside protection. Morningstar OBSR needs time to build conviction in the fund’s new team and process so it is therefore awarding the fund a Neutral rating."
