Square Mile admits eight to Academy of Funds, drops two

Mercantile Investment Trust amid new class of funds to be awarded ratings

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Square Mile has admitted eight new funds to its Academy of Funds, including the Mercantile Investment Trust, while dropping ratings for the Pimco GIS Dynamic Multi-Asset fund and the Abrdn Europe ex-UK Income Equity Fund.

Throughout April, Square Mile awarded A ratings to the Premier Miton Diversified Growth fund range, the HSBC US Multi Factor fund, and the Mercantile Investment Trust. The Vanguard Global Corporate Bond Index and the Vanguard Global Short Term Corporate Bond Index funds both received ‘recommended’ ratings, which are given to passive vehicles that “meet the highest standards in their fields”.

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Analysts at Square Mile lauded the Premier Miton Diversified Growth fund range for its original Diversified Growth fund for impressive returns for over a decade. The range also includes the Premier Miton Diversified Cautious Growth, Diversified Balanced Growth, Diversified Growth and Diversified Dynamic Growth funds.

“Key to the strategies’ success are the views of the specialist investment teams at Premier Miton which are responsible for the underlying sleeves which collectively make up the funds within the range,” the Square Mile team stated.

“The analysts believe them to be a robust option for investors seeking a range of growth-orientated actively managed multi-asset portfolios.”

The HSBC US Multi Factor fund received recognition for its “ability to consistently provide alpha across a range of strategies since July 2006”. The fund focuses on value, quality, momentum, low risk and size, and has an ex-ante tracking error of 2.5% each year relative to the S&P 500 index.

“This is one of the cheapest active funds in the North American sector and therefore suitable for investors cost constraints. Square Mile believes that this fund will be a good complement to the existing active US Equity funds already within the Square Mile Academy,” the team stated.

The Mercantile Investment Trust, headed by Guy Anderson, is focused on UK equities outside the FTSE 100.

“Investors benefit from a repeatable, efficacious investment process, the liquidity of a £1.7bn investment vehicle and a current yield of approximately 3% which has grown each year over the past 10 years,” the report said.

Square Mile also opted to retain the A ratings of the Royal London Index Linked and Royal London Short Duration Gilts funds following the retirement announcement of head of fixed income Jonathan Platt, who will be replaced by head of private assets William Nicoll.

“Square Mile’s analysts do not foresee any changes in the day-to-day management of either the Royal London Short Duration Gilts or Royal London Index Linked funds, with the respective underlying philosophy and investment teams remaining in place,” the report stated.

“They are therefore comfortable in retaining their A ratings on both strategies.”

However, the departure of lead manager Geraldine Sundstrom from Pimco in May has led to the removal of the A rating from the Pimco GIS Dynamic Multi-Asset. Co-managers Erin Browne and Emmanuel Sharef will stay on with the fund.

“While Square Mile acknowledges Pimco’s strong resources and team approach, the fund’s rating was largely predicated on Ms Sundstrom’s experience of managing dynamic multi-asset strategies,” Square Mile said.

The exit of Stuart Brown has also led to the loss of a ‘positive prospect’ rating for the Abrdn Europe ex-UK Income Equity fund. Charles Luke, who currently leads the Murray Income trust, will take over the management position of the fund.

“The fund has lost its two portfolio managers within a relatively short period, with the previous co-manager departing in September 2023, and Square Mile would therefore like time to monitor the strategy and its investment team,” the team stated.