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Square Mile ratings: Premier Miton, HSBC and Mercantile trust in, PIMCO out

13 May 2024

The research company’s Academy of Funds has several new entrants and two departures.

By Matteo Anelli,

Senior reporter, Trustnet

Square Mile Investment Consulting and Research has released its latest Academy of Funds round-up today, announcing the departure of two funds and a number of new entrants.

It has expelled PIMCO GIS Dynamic Multi-Asset and abrdn Europe ex-UK Income Equity from its Academy of Funds due to changes in leadership. Managers Geraldine Sundstrom and Stuart Brown are about to leave PIMCO and abrdn, respectively.

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

“As for the abrdn fund, it has lost its two portfolio managers within a relatively short period, with the previous co-manager Tom Dorner departing in September 2023, and Square Mile would like time to monitor the strategy and its investment team after the announced new manager, Charles Luke, will have stepped in.”

These defections were compensated by several additions to the fray.

Premier Miton secured a quartet of new ratings for its Diversified Growth range, with the Diversified Cautious Growth, Diversified Balanced Growth, Diversified Growth and Diversified Dynamic Growth funds all gaining an A rating as they enter the Mile Academy of Funds.

The flagship fund in the range, Diversified Growth, has delivered strong risk-adjusted returns for more than a decade, while the other three funds have achieved this since their launch over five years ago.

Performance of fund against sector and index over 5yrs

Source: FE Analytics

“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 analysts said.

“These funds are a robust option for investors seeking a range of growth-orientated actively managed multi-asset portfolios.”

One of the cheapest active funds in the IA North American sector, the HSBC US Multi Factor Equity fund also received an A rating thanks to the managing team’s ability to “consistently provide alpha across a range of strategies since July 2006”.

The fund offers core exposure to US equities, targeting an ex-ante tracking error of 2.5% per annum from the S&P 500 and focusing on value, quality, momentum, low risk and size factors.

In the closed-ended space, the Mercantile Investment Trust also joined the list with an A rating. The strategy is led by the “experienced” Guy Anderson, who is part of a “well-resourced” team at JPMorgan Asset Management.

The trust predominantly focuses on high-quality and fast-growing UK equities listed outside of the FTSE 100. It convinced Square Mile for its “repeatable, efficacious” investment process, its liquidity as a £1.7bn investment vehicle, and its yield which has grown each year over the past 10 years and is currently at 3%.

Finally, the Vanguard Global Corporate Bond and Global Short Term Corporate Bond index funds were given Recommended ratings, which are awarded to funds that “meet the highest standards in their fields but cannot be readily differentiated from their direct peer group, such as passive vehicles”.

The former tracks the Bloomberg Barclays Global Aggregate Float Adjusted Corporate Index Hedged and the latter the Bloomberg Barclays Global Aggregate Corporate 1-5 Year Float Adjusted Index Hedged.

“Both funds’ benchmarks are structured in such a way that the largest constituents will be companies with the highest absolute levels of debt. While this could create a concern from a credit risk perspective, it is difficult to avoid given the size of the investment universe,” the analysts concluded.

Strategies admitted to the Academy of Funds

Source: FE Analytics


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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.