BMO Gam’s £985m range of unfettered fund-of-funds has been demoted by Square Mile in its latest ratings round-up, which also saw the Baillie Gifford UK Equity Alpha fund lose its rating.
In November, the research firm removed its rating on the BMO Gam Navigator range, following a “broader review of the multi-asset sector”.
The news comes hot on the heels of BMO Gam multi-manager co-head Gary Potter’s (pictured) retirement from fund management. However, Square Mile said its decision was based on charges and portfolio structure.
“While the funds benefit from an experienced and well-regarded team, Square Mile’s analysts lack the necessary long-term conviction to maintain the ratings,” the research house said.
“There has been a trend to outflows across higher cost offerings more generally, and Square Mile’s value for money analysis alongside a review of the portfolio’s structure has contributed to a decision to remove the ratings.”
BMO MM Navigator Distribution, the cheapest fund in the £985m range, has an ongoing charges figure of 1.39%. Its smallest fund, BMO MM Navigator Boutiques, is also its most expensive, charging 1.86%.
| Fund | OCF | Size |
| BMO MM Navigator Balanced | 1.84% | £74.2m |
| BMO MM Navigator Boutiques | 1.86% | £58.8m |
| BMO MM Navigator Cautious | 1.56% | £218.4m |
| BMO MM Navigator Distribution | 1.39% | £530.5m |
| BMO MM Navigator Growth | 1.74% | £102.9m |
Source: BMO Gam
See also: Who’s next to step up after multi-asset changing of the guard?
Baillie Gifford UK Equity Alpha loses out due to manager change
The Baillie Gifford UK Equity Alpha fund also lost its rating, following the news that manager Gerard Callahan will retire next April. Callahan, who has run the fund since 2000, will hand over the reins to Milena Mileva from 1 May 2022.
Square Mile said that although Mileva has a “closely aligned investment approach” to Callahan and “has built a highly promising track record over the limited time she has managed money,” its analysts believe there will be “some nuances” to the way the fund is run. Mileva also runs the Baillie Gifford UK Equity Focus fund and is a co-manager on the Baillie Gifford UK Growth trust.
Square Mile said it would review the £938.8m fund again once the manager handover and changes in approach have had time to settle in.
Mike Riddell’s A rating reinstated
However, the research house said it was reinstating Mike Riddell’s Allianz Strategic Bond fund into its Academy of Funds.
Square Mile had suspended the £2.8bn fund’s A rating in May, following the departure of co-manager Kacper Brzezniak, who it said had played an important role in contributing macroeconomic idea generation and his skillset in trading and derivatives.
However, due to Riddell’s “swift strengthening of the team” through three senior hires, including new deputy co-portfolio managers Ravin Seeneevassen and Joe Pak, Square Mile said its “conviction remains intact”.
“Despite disappointing performance over the year to date, the fund maintains its core fixed income attribute of providing close to zero correlation to equities which remains a distinctive and attractive feature,” it said.
See also: Mike Riddell: ‘We don’t believe in this new higher inflation regime’
Square Mile handed out five new ratings in its November ratings round-up. The Dimensional European Value and Brown Advisory US Mid-Cap Growth funds bagged A ratings, while the Federated Hermes Impact Opportunities Equity and Schroder Global Energy Transition funds were awarded the Responsible Positive Prospect rating. The Pictet Global Environment Opportunities received a Responsible A rating.
The Twenty Four Corporate Bond fund saw its rating upgraded from A to AA in the month. Analysts noted the fund continues to deliver attractive risk-return characteristics by focusing on capital preservation and mitigating volatility, and highlighted the “active, high conviction approach” of the managers who are supported by an “ample and well-regarded team”.
