Square Mile awarded ratings to two sustainable bond funds in a recent adjustment, which saw six portfolios enter its Academy of Funds.
One was the €583m (£502m) Goldman Sachs Sovereign Green Bond fund, which invests in green bonds issued by governments.
Analysts at Square Mile praised its “highly capable and well-regarded investment team”, despite the fund’s returns being down 20.8% since it launched in early 2021.
However, most of this negative performance came from a steep downturn in its first full year of 25.5%. It generated positive returns of 8.4% and 1.3% in the ensuing years of 2023 and 2024.
Square Mile researchers said the funds offers “a diversified portfolio of high quality sovereign green bonds with a focus on the European market”. It has its highest allocations to issuers in France, the Netherlands and Germany, which account for exactly half of the portfolio.
“Green bonds are effective in offering a direct solution to an environmental issue as their proceeds are used exclusively for projects that have a positive impact on the environment,” Square Mile said.
“This fund is therefore an interesting proposition for investors seeking to achieve a positive environmental impact from their investments through a portfolio of high-quality government bonds.”
The fund research firm also added TwentyFour Sustainable Short Term Bond Income to its recommended list.
This £1.4bn fund is up 8.2% since launching in late 2021, after also having had a challenging start in 2022, falling 4.4% throughout its first full year.
Square Mile analysts said it is “an attractive option for investors looking for a short dated investment grade bond fund with sustainable objectives”.
They added that Chris Bowie and Gordon Shannon are “a pair of very capable managers” and benefit from TwentyFour’s specialism in fixed income.
“This strategy aims to deliver a combination of income generation and capital preservation within a low volatility profile,” they added.
“It is designed to be a simple, longonly strategy with no leverage and no complicated derivatives overlay, and although Mr Bowie had not run this type of fund previously, we believe he is aptly suited to the mandate’s requirements.
“He has been managing fixed income portfolios for well over 20 years both across global credit and government bonds.”
Other new entrants
Square Mile also gave its stamp of approval to Rathbone Global Opportunities for investors who have more of an appetite for growth stocks.
The £3.6bn fund managed by James Thomson and Sammy Dow is up 197.2% over the past decade, beating its peers in the IA Global sector by 89.8 percentage points.
Researchers at Square Mile said: “This fund is an attractive choice for investors that are looking for a strategy with a quality growth bias that is appropriately diversified by stock, but with a slightly higher growth profile than many of its quality peers.”
For a more diversified exposure to global equities, Square Mile recommended GMO Quality Investment thanks to the focus on valuation from managers Tom Hancock, Ty Cobb and Anthony Hene.
“This fund offers a differentiated approach to investing into quality companies within the global sector, predominantly due to the managers’ greater focus on valuation.
“Whilst the primary focus is on selecting high quality companies that are attractively priced, the final portfolio is constructed using a blend of companies with value, core and growth characteristics.
“Overall, this strategy to be suitable for investors looking for a fairly concentrated portfolio focused on quality, but with an eye on valuation risk.”
The $4.6bn (£3.6bn) fund is up 266.7% over the past decade, more than doubling the 107.4% return made by its peers in the IA Global sector.
Also to enter Square Mile’s Academy of Funds at the recent re-rating was Jupiter Strategic Absolute Return Bond and Dimensional Emerging Markets Value.