Best Europe Equity Fund
Comgest Growth Europe
- Morningstar Analyst Rating: Silver
- People Pillar Score: High
- Process Pillar Score: High
Managed by a stable and experienced team, this fund has excellent expertise in European growth stocks. Laurent Dobler, Arnaud Cosserat and Franz Weis each have more than 25 years of experience and have worked at Comgest for 30, 25 and 16 years, respectively. Dobler, who has been a manager of French domiciled clone Comgest Renaissance Europe since 1991, is nearing retirement. But a long-term succession plan has been patiently put in place. Alistair Wittet and Pierre Lamelin were appointed strategy managers in 2018. Three analysts have been recruited since 2018, bringing the team size to 10 managers and analysts. Each analyst and manager conducts in-depth research on only about a dozen stocks, and each company within the universe is covered by at least two team members.
The investment process targets only quality growth stocks and is applied consistently and skillfully. The team prefers very robust companies with dominant market positions, growth potential and high profitability, regardless of the economic cycle. Thus, most cyclical stocks, including financials, are generally excluded from the investment universe. The identified companies then go through a thorough fundamental research process, including numerous meetings with their executives and other stakeholders. They are then evaluated using a rigorous valuation process based on discounted earnings and dividend models. Their investment horizon is long, typically between three and five years. This fund owns just 30 to 35 stocks and shows an active share regularly above 75%.
The France-domiciled version of the strategy, Comgest Renaissance Europe, was launched in 1991 and has a longer track record. Its returns over the past five, 10 and 15 years have been well above the category average and above that of the MSCI Europe Growth Index. However, the fund is not designed to outperform in all market environments and may look poor in the short and medium term, especially when markets favor lower quality stocks. Stock selection has historically been the most important performance driver.
Best Global Equity Fund
Fundsmith Equity
- Morningstar Analyst Rating: Silver
- People Pillar Score: High
- Process Pillar Score: High
A highly structured and disciplined investment approach overseen by a manager with a long track record are among Fundsmith Equity’s many strengths.
Terry Smith, who has experience in the investment industry dating back to 1974, co-founded Fundsmith LLP in 2010 and launched this strategy based on the success he achieved as an investment advisor to the Tullett Prebon pension fund. He demonstrates an original view on investing and he dares to go against the grain. Smith is joined by Julian Robins, a co-founder of the firm who has worked with him for more than two decades, and three analysts, the most recent of whom was hired in 2020.
The investment process rests on disciplined and consistent implementation of a well-designed strategy. The approach is bottom-up, with a combination of quantitative screenings and in-depth fundamental analysis by the team. The manager’s goal is to buy and hold, ideally forever, high-quality businesses that will continually compound in value. High-quality companies are considered those that have an above-average cash return on operating capital employed, and an ability to sustainably grow at this rate of return. To meet those two criteria, the fund targets companies with a strong competitive advantage (typically based on significant intangible assets) and limited financial leverage. The resulting portfolio of 20-30 stocks is highly concentrated, which can also lead to sector concentration.
The performance that Smith and the team have achieved with this strategy has been outstanding, and the fund has been among the best performing funds in the Morningstar global large-cap growth equity category over several periods.
Best EUR Bond Fund
BlueBay Investment Grade Bond Fund
- Morningstar Analyst Rating: Bronze
- People Pillar Score: Above Average
- Process Pillar Score: High
Investors in BlueBay Investment Grade Bond benefit from a consistent investment approach and an experienced portfolio management team.
Marc Stacey and Tom Moulds are co-leads, while Andrzej Skiba has been involved in the US bottom-up and top-down calls since 2008. Stacey joined BlueBay in 2004 and became comanager here in August 2013, while Moulds joined in 2005 and became comanager in 2016. The trio of portfolio managers is part of BlueBay’s 13-member portfolio management team. They are backed by six corporate credit analysts with close to 19 years’ experience on average. The managers also benefit from the support of seven rates/sovereign macro specialists.
Bottom-up security-selection is the main driver of returns, while duration is kept within a year of the benchmark’s, and below-investment-grade bonds are limited to 15%. The managers usually keep about
10%-20% of assets in liquid government bonds and then use credit default swaps to add an additional overlay of credit market exposure.
Since 2013, when two of the three portfolio managers took over, the strategy outperformed its EUR corporate bond Morningstar category peers on an absolute and risk-adjusted basis.
Best EUR Allocation Fund
Capital Group Global Allocation (Lux)
- Morningstar Analyst Rating: Bronze
- People Pillar Score: High
- Process Pillar Score: Above Average
Capital Group Global Allocation impresses with its seasoned manager team, proven approach, and a parent company that serves its investors exceptionally well.
In typical Capital Group style, the fund is run by a group of portfolio managers who focus on their own sleeves, investing with different styles and convictions. All managers are seasoned professionals with an average of 26 years’ professional experience and 19 years’ tenure at Capital Group. As principal investment officer, Paul Flynn provides oversight and tracks results and risk at the strategy level, on top of managing his balanced sleeve. The six managers are supported by Capital Group’s large and experienced research team.
Four allocation managers account for 75% of assets in the fund, while two fixed-income managers invest the remaining 25%. The fund’s equity weight varies between 45% and 75% based on the balanced managers’ views, who can hold up to 40% in bonds or cash. Each balanced manager has a unique investment approach, which leads to style and risk diversification at the portfolio level. All balanced portfolio managers generally follow a long-term-oriented, high-conviction approach with usually around 25-50 holdings each, mostly large-cap stocks. The bond sleeves are managed conservatively, consisting
Asset Manager Award
The Morningstar Award for Investing Excellence for the best asset manager is presented to the asset manager that not only stands out based on excellent performance of its fund line-up, but also, in the opinion of Morningstar’s fund analysts, has an outstanding investment culture and puts the interests of investors first. This is the 2022 winner.
Capital Group
- Parent Pillar Score: High
Asset Manager Sustainable-Investing Award
Finally, Morningstar introduced a new award, for best asset manager sustainable investing. This award is given to the asset manager that not only scores well based on the Morningstar Sustainability Rating, but is also strongly committed to integrating environmental, social and governance factors into its fund offering. These asset managers typically have a clearly defined ESG philosophy, a strong degree of ESG integration into investment processes and adequate resources to conduct sustainability research. In addition, these asset managers also have solid corporate engagement and proxy-voting programs. This is the 2022 winner.
Impax Asset Management
- ESG Commitment Level: Leader