Category Awards
The Morningstar Awards for Investing Excellence are handed out to those mutual funds that have not only distinguished themselves on the basis of their outstanding historical risk-adjusted returns, but which, in the opinion of Morningstar’s fund analysts, also differentiate themselves from the competition. We expect that their outstanding portfolio management team and a proven investment process give these strategies the ability to continue to deliver superior returns versus their category benchmark in the future. These are the winners of 2024.
Best Europe Equity Fund
Brandes European Value
Morningstar Medalist Rating: Silver
People Pillar Rating: High
Process Pillar Rating: Above Average
The fund is steered by a stable five-person committee. Amelia Morris, Jeffrey Germain, Brent Woods, Luiz Sauerbronn, and Shingo Omura have a 10-year joint tenure on the strategy with Morris being involved for the past 20 years. Each brings a wealth of experience to the table, and they are backed by a solid team of 22 fund managers and analysts.
This strategy is purely bottom-up, with a clear focus on valuation and a willingness to go against the crowd. Each member of the committee engages in thorough fundamental research to identify undervalued European equities. The team’s collaborative effort includes independent fair value calculations for potential investments, ensuring a well-rounded assessment of each stock. Despite the high risks associated with potential value traps, their track record suggests a propensity for making more correct decisions than not.
Brandes European Value’s distinctive strategy, characterized by its minimal regard for benchmarks and a greater allocation to small- and mid-cap stocks, may not suit every investor. However, those with a long-term perspective and tolerance for fluctuating performance have been well compensated.
Best Global Equity Fund
Artisan Global Value Fund
Morningstar Medalist Rating: Silver
People Pillar Rating: High
Process Pillar Rating: High
Dan O’Keefe has led this strategy since its 2007 inception. He joined Artisan in 2002 after spending five years at Harris Associates. O’Keefe is an exceptional investor who has posted superb returns throughout his 30-year career and has consistently stuck to his knitting through thick and thin. Joining O’Keefe is comanager Michael McKinnon, who joined the firm as an analyst in 2010. McKinnon became a comanager in October 2018. Supporting the managers are four analysts, all of whom are sector generalists with regional focuses.
This team is composed of value investors who emphasize quality firms with financial strength and shareholder-oriented management. The team leverages qualitative and quantitative screens to narrow the investment universe to a manageable level. The team conducts in-depth fundamental research on prospective holdings and assigns three-year price targets. It invests in firms of all sizes that trade at discounts to their intrinsic value estimates, although the focus is overwhelmingly on large-cap stocks. The resulting portfolio holds just 40–60 stocks.
The team remains committed to the approach, and that’s likely to lead to good outcomes for investors here over the long term.
Best Euro Bond Fund
BlueBay Investment Grade Bond Fund B EUR
Morningstar Medalist Rating: Bronze
People Pillar Rating: Above Average
Process Pillar rating: High
BlueBay Investment Grade Bond benefits from continuity in both its investment approach and the experienced portfolio management team. Marc Stacey and Tom Moulds are co-leads, while Andrzej Skiba has been involved in 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. Raphael Robelin was lead portfolio manager from November 2003 until December 2017. He gradually became less involved in day-to-day management from 2013 when he became co-CIO. In 2015, when Robelin was appointed sole CIO, day-to-day portfolio management was transferred to the current team.
The strategy aims to outperform the iBoxx Euro Corporate Index by 150 basis points per year before fees, with a credit alpha security selection target of 100 basis points and top-down drivers such as term structure (duration management using interest-rate futures and swaps) and credit beta (using credit default swaps) targeting 25 basis points alpha each. Duration is kept within a year of the benchmark’s, and below-investment-grade bonds are limited to 15%. The investment process utilizes a wide range of internal resources, including three portfolio managers, each specializing in a particular credit sector; six macro specialists supporting the top-down calls; and nine experienced credit analysts.
Best Euro Allocation Fund
Vanguard LifeStrategy 60% Equities ETF EUR Acc
Morningstar Medalist Rating: Gold
People Pillar Rating: Above Average
Process Pillar rating: Above Average
This ETF takes a simple and low-cost approach to investing in a globally diversified portfolio of bonds and stocks, making it a good long-term option for many investors. This exchange-traded fund has a static equity exposure of 60% which Vanguard’s asset allocation committee and strategy group closely monitors. The committee reviews that allocation annually, although it rarely changes. Rebalancing occurs several times a week, so investors always know what exposure they are getting.
The team uses Vanguard ETFs to minimize costs, and the equity exposure reflects global market capitalizations. Within the fixed-income portfolio, there is a preference for government bonds. The thinking is that government bonds have generally provided more effective diversification of equity risk than lower credit-rated bonds, which often show significant correlation to stocks. The portfolios’ longer-than-average duration profile makes them more sensitive to changes in interest rates and weighed down returns when rising interest rates sent both stock and bond prices lower. In 2023, this tracker finished within the first decile of the Morningstar category.
Asset Manager Award
The Morningstar Award for Investing Excellence for the best fund house is handed out to an asset manager that not only stands out on the basis of the strong performance of its fund range, but also, in the opinion of Morningstar’s fund analysts, demonstrates an outstanding investment culture and puts investors’ interests first. This is the 2024 winner.
RBC BlueBay
Parent Pillar Score: Above Average
RBC BlueBay is a London-based asset manager specializing in fixed income strategies. It was founded in 2001 and was acquired by Royal Bank of Canada in late 2010. On April 1, 2023, BlueBay and RBC Global Asset Management UK were consolidated as RBC GAM UK and operated as one company from then on. BlueBay has retained its brand and uses RBC BlueBay as its corporate name in EMEA/Asia. CIO Mark Dowding retains full autonomy and control over the investment process of its strategies.
As of June 2023, RBC BlueBay managed $108 billion in traditional investment-grade and high-yield bonds, emerging markets, structured credit, convertible bonds and multi-asset bond funds. Fund flows have been generally positive in recent years, despite a challenging market environment. The firm’s ability to offer customized solutions has proven popular with investors. We believe RBC BlueBay has the necessary expertise to manage its diversified product offering.
Following the introduction of the RBC compensation policy, variable compensation is now more focused on performance over three and five years. This is an improvement over the previous structure that focused on short-term performance.
One of the past concerns was the high staff turnover within the investment teams. However, this has been remedied and is at a lower level today. At the same time, on balance, investment personnel have been added in recent years, while resources have been added in other functions, such as customer service and sales, risk management, compliance and IT.
Overall, RBC BlueBay has a strong reputation in fixed income. Coming under one umbrella with RBC means more alignment with RBC GAM UK and the way it operates, including its compensation structure. The company has shown improvements on a number of fronts, including staff turnover, keeping managers on board and compensation structure.
Asset Manager Sustainable-Investing Award
In addition to the regular fund house award, there is also an award for the best fund house in sustainable investing. This award is handed out to the asset manager that not only scores well on Morningstar sustainability data, 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 fund houses are characterized by their extensive engagement and proxy-voting activities. This is the 2024 winner.
Impax
Morningstar ESG Commitment Level: Leader
SRI has been at the core of Impax’s culture since its founding in 1998, and this is reflected in its product offering that is entirely focused on d/sustainable funds. The company is characterized by its thoughtful, thorough approach to SRI, extensive and experienced resources and strong active ownership practices.
At its founding, the company pioneered SRI by focusing on solutions to address resource scarcity, including alternative energy, water and waste management. Since then, the company has expanded its product range while staying true to its focus on sustainability. As a result of this focus, its various investment approaches are based on positive inclusion rather than negative screenings or exclusions.
Impax’s ESG research is largely generated internally. ESG analyses at Impax are conducted by the investment teams, particularly the listed equity team. This is a stable team of over 35 members that boasts a wealth of experience in both investment and sustainability. Impax’s Sustainability and Stewardship team, led by the experienced Lisa Beauvilain, provides support and oversight. The team has been strengthened in recent years, with no team members leaving.
In addition to the firm’s robust in-house ESG research and tools, including a company-level ESG assessment and score, the high-quality ESG research is supported by the regular publication of insightful thought leadership pieces. In addition, Impax’s sustainable investment philosophy is reflected in its proxy-voting strategy. True to its DNA, the company has supported all major ESG shareholder resolutions on which it has voted over the past three proxy seasons.