Standard & Poor’s Fund Services today released its style-neutral peer group as part of its 2011 Australian Equities Large-Cap sector review.
We upgraded the Schroders Wholesale Australian Equity Fund to five stars and downgraded the BlackRock Wholesale Australian Share Fund to two stars. At the same time, we affirmed our ratings on 13 funds, including our five-star rating on the BT Wholesale Core Australian Share Fund.
“We upgraded the Schroders Wholesale Australian Equity Fund to five stars based on our overall conviction in the team and the durability of the investment process. Schroders has one of the largest teams in the market and we have a high regard for the quality and depth of its research. We consider the manager’s strong leadership structure and risk-awareness to be key attributes of this offering,” said S&P Fund Services analyst James Gunn.
The BlackRock Wholesale Australian Share Fund has struggled to meet its objectives since it was transformed to an insights-based approach in October 2008. The downgrade at this review cycle has been driven by our reduced conviction in the manager’s ability to identify value-adding investment insights, as well as implementation issues at the construction stage.
Mr Gunn added: “In general, style-neutral funds are constructed with the objective of delivering relatively consistent outperformance through the cycle, irrespective of which investment style may be prevailing. However, these strategies will exhibit style tilts at times, as a function of both market opportunities and process, which can be an additional source of performance divergence. The funds in this peer group have generally been successful in generating excess returns over both the medium and long term.”
