Morningstar’s manager research team has downgraded its rating of the £4.1bn Lindsell Train Global Equity fund following a period of underperformance.
The strategy’s ‘Process’ pillar has been revised from an ‘Above Average’ rating to ‘Average’, while the ‘People’ pillar has maintained an above average rating.
Morningstar’s analysts said they believe the competitive position of the fund has “diminished”, with evidence of “consistently retaining underperforming assets” and “lacking sell discipline”.
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The analysts also recognised that narrow market leadership has played a part in the fund’s underperformance relative to its peer group, with the strategy holding none of the Magnificent Seven stocks.
The strategy, run by co-managers Michael Lindsell and Nick Train (pictured), has underperformed the IA Global sector over one, three and five years, according to FE Fundinfo data.
However, it has delivered annualised returns of 13.1% since launch in 2011, 1.1% above the MSCI World Index.
Daniel Haydon, analyst at Morningstar, said: “We still appreciate the fund’s defensive properties but, due to competition for capital in the portfolio, we believe it doesn’t stack up as well to the competition. It is no longer clear how this fund could durably outperform the market, particularly when compared to other global equity quality-oriented managers.
“Higher conviction picks in global quality growth include Fundsmith Equity I, GuardCap Global Equity Fund I USD, and BlackRock Unconstrained Equity fund Institutional Shares, which is managed by Nick Train’s former employee Alistair Hibbert.”
