Fidelity The Only Five-Star Manager In S&P’s Australian Equities Large-Cap Growth/GARP Peer Group


Standard & Poor’s Fund Services today released its Growth/GARP (growth at a reasonable price) peer group as part of its Australian-Equities Large-Cap sector review. Fidelity was the only manager to retain its five-star rating, with the Ausbil Australian Active Equity Fund and Perennial Growth Shares Wholesale Trust both downgraded to four stars. We removed the Invesco Wholesale Australian Share fund from ‘On Hold and assigned a three-star rating. In total, we affirmed our ratings on 10 funds, downgraded two, upgraded three, and removed one fund from ‘On Hold’. 

We first assigned a five-star rating to the Fidelity Australian Equities Fund in 2008. Paul Taylor and his team of analysts at Fidelity have demonstrated great skill over an extended period of time and we believe the manager’s competitive strengths remain in place for this to continue. Conversely, while we continue to regard Ausbil and Perennial Growth as two of the stronger managers in this peer group, we no longer have a five-star level of conviction.

“Ausbil has continued to attract significant inflows across its large-cap strategies, which is testament to its exceptional long-term track record. While the manager’s flagship strategy is soft closed to institutional investors, we believe that strong growth in total assets over recent years may present some additional challenges in terms of Ausbil’s particular style of growth investing. For Perennial Growth, the retirement of Ken West in 2009 and subsequent departure of his replacement earlier this year have temporarily reduced experience in the key resources sector. This, in conjunction with modest performance outcomes relative to peers, has reduced our overall conviction,” said S&P Fund Services analyst James Gunn.

We have upgraded the three CFS growth funds to four from three stars, primarily due to our conviction in the depth of the team’s industry and stock research, as well as improved stability under the leadership of Marcus Fanning. Mr. Gunn concluded: “While we only assigned one five-star rating at this review cycle, the number of four-star ratings is a strong reflection of the overall quality of offerings within this peer group.”

We have now released ratings on nine of the 12 peer groups in our 2011 Australian Equities Large-Cap sector review. We will release the remaining peer groups progressively over the next month, followed by our key findings in the sector report. Reports for all funds rated in the peer groups published today are now available on S&P’s subscriber website

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