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Five funds lose Square Mile’s backing in latest review

05 June 2024

Three Allianz bond funds have their ratings removed following Mike Riddell’s departure.

By Matteo Anelli,

Senior reporter, Trustnet

Three of Allianz Global Investors’ bond funds have been expelled from the Square Mile Academy of Funds, the investment consulting and research firm announced today.

Baillie Gifford and GAM funds also lost ground.

The departure of ­Mike Riddell, lead manager of the A-rated Allianz Strategic Bond, Allianz Index-Linked Gilt and Allianz Gilt Yield funds, spurred Square Mile’s decision to remove its ratings from all three strategies.

“Julian Le Beron, chief investment officer of core fixed income at Allianz, will assume immediate control of the funds, bringing a different investment approach,” Square Mile explained.

“As the funds’ ratings were centred around the analysts’ conviction in Riddell and the process which he built over several years at Allianz, they feel they can no longer support their inclusion in the Academy of Funds.”

In the wake of Riddell’s move to Fidelity International, fund selectors suggested five alternative strategic bond strategies for investors looking to move their money.

Elsewhere, Baillie Gifford Multi Asset Growth also lost its a rating after its medium-term performance failed to live up to analysts’ expectations.

“This, coupled with changes within the underlying team, has led to conviction falling to a level where they no longer feel they can support the fund’s place within the Academy of Funds,” Square Mile noted.

Performance of fund against sector and index over 5yrs

Source: FE Analytics

Square Mile’s conviction in the GAM Star Japan Leaders fund also waned, due to “instability in the management team over recent years and a continual decline in assets under management”.

The size of the fund peaked at approximately £320m in September 2021 and steadily declined to today’s £73m. Therefore, the analysts decided to remove the fund’s A rating..

Moving to the new entrants, two strategies joined the Academy of Funds with newly awarded A ratings.

The first was the Fidelity China Special Situations trust, which Square Mile said was ideal for long-term investors seeking broad exposure to China, offering access to both listed and unlisted companies, as well as those with significant interest in Chinese markets.

It has significant exposure to medium and smaller companies and was prized by Square Mile analysts for the combination of “an experienced portfolio manager supported by a well-resourced analyst team, and an efficacious process within an under-researched opportunity set”.

While the IT China/Greater China sector only includes three trusts, Fidelity’s solution has topped the rest across all time frames and came first for performance over 10, five and three years, as well as one month.

Performance of fund against sector and index over 5yrs

Source: FE Analytics

The second entrant was Capital Group New Perspective, which was officially launched in 2015, but the broader strategy dates back over half a century. It has “a proven track record of delivering excess returns through the cycle” and of keeping up when market leadership changes.

“Drawing upon Capital Group’s multiple-manager approach, the fund takes a flexible approach to managing assets to identify transformational changes in the global economy and to benefit from long-term structural trends in markets,” Square Mile analysts said.

“Overall, we believe this fund to be a solid offering for long-term investors looking for a global equity strategy that is managed in a risk-aware manner and seeks to remain competitive across most market conditions.”

Source: FE Analytics

Finally, the Premier Miton Multi-Asset Distribution and Multi-Asset Monthly Income funds were downgraded from AA to A ratings as the long-standing co-head of the multi-manager team, David Hambidge is stepping back from day-to-day fund management responsibilities on 1 July.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.