Square Mile Investment Consulting and Research removed ratings on six funds last month, including two Ninety One funds run by Alastair Mundy who announced he was stepping back from fund management due to health reasons.
The ratings agency removed its AA ratings on the Investec UK Special Situations and Investec Cautious Managed funds on 17 April following news that Mundy would take an extended leave of absence and hand the reins to Alessandro Dicorrado and Steve Woolley as co-managers.
Investec Asset Management rebranded to Ninety One and floated on the London Stock Exchange in March amid the coronavirus-induced market turmoil.
Alastair Mundy ‘architect’ and ‘integral’ to the team and funds
In a note, Square Mile analysts described Mundy (pictured) as the “architect and team head” of Ninety One’s value franchise and “integral” to the management of both the team and the funds.
“They therefore consider it prudent to remove the ratings while the team adapts to the change in structure and leadership,” they added. “Square Mile will continue to monitor the funds during this transitionary period. Square Mile sincerely wishes Mr Mundy well in his recovery.”
> See also: Temple Bar to review management after Alastair Mundy steps back
Invesco, Man GLG and Syz Asset Management see funds stripped of ratings
Square Mile conducted 50 interviews with professionals at 23 asset management firms during the month.
It also removed its A rating on the Invesco Global Financial Capital fund with analysts noting the fund had been subject to ongoing outflows, particularly in Q1, which took assets to below £20m after a run of poor performance.
“While the fund has a specialist remit, the analysts do not anticipate investor demand for the strategy in the immediate future,” they added.
Man GLG Innovation Equity Alternative fund was also removed from Square Mile’s Academy of Funds after it was stripped of its A rating on the departure of manager Priyan Kodeeswaran.
Square Mile said: “Although the fund’s newly-appointed manager Mike Corcell, who joined Man GLG in October 2019, has been followed by Square Mile through his past employments, the analysts believe it is prudent to remove the rating while any changes to the fund’s investment strategy are assessed.”
Two Syz Asset Management funds, Oyster Continental European Selection and Oyster European Selection, have been removed from the Square Mile Academy after their ratings were suspended in February.
Square Mile said while it held lead manager Mike Clements in high regard, falls in AUM, departures from the team and a change in the firm’s ownership led it to remove the funds’ ratings.
In February it was announced that iM Global Partner had struck a deal to acquire Syz Group’s Luxembourg-based asset management business, including its €2bn (£1.7bn) Oyster funds range.
Ratings downgrades and suspensions
The MI Somerset Emerging Markets Dividend fund had its rating downgraded from AA to A. Square Mile said the fund had struggled relative to its MSCI Emerging Markets benchmark leading manager Ed Lam to adjust the investment approach.
Square Mile also suspended its rating on the Matthews Asia Smaller Companies fund after it was announced lead manager Lydia So was leaving the company. So has managed the strategy since 2008 and will be replaced by the fund’s co-manager Tiffany Hsiao, who Square Mile will interview in the coming weeks.
> See also: Tiffany Hsiao – Overlooked Chinese innovators should have a higher market cap
Square Mile rates funds A, AA or AAA depending on its confidence in the ability to deliver on its stated objectives. It also has an R (recommended) rating for funds that meet the highest standards in their field but are not readily differentiated from their peer group and a P+ (positive prospect) rating for those it deems compelling but where the manager or strategy has not been thoroughly tested in a full market cycle.
