Hugh Sergeant’s R&M Global Recovery loses Square Mile rating

ES R&M Global Recovery lost its A rating due to a run of lacklustre long-term returns. Over three and five years, the fund has ranked fourth quartile in the IA Global sector.

Although it has moved up to top quartile in the past six months – as equity markets entered a growth value/recovery rotation – this was not enough to reassure Square Mile analysts.

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They said that despite manager Hugh Sergeant’s “lengthy investment experience and impressive long-term track record running UK equity strategies”, they do not feel this success has been repeated within a global equities mandate.

Sergeant’s other mandate, the ES R&M UK Recovery fund, has had the polar opposite performance, ranking in the top quartile over three and five years but slipping down to third near-term due to the aforementioned market upheaval.

Square Mile analysts added: “Over time, the fund has struggled to meet the analysts’ expected outcome and following a lengthy review, they have taken the decision to remove the fund from Academy.”

Elsewhere, Guinness Global Equity Income fund was awarded a AA rating and the Rathbone Multi-Asset Portfolio Range gained a Recommended badge.

On the former, analysts called the fund’s managers Ian Mortimer and Matthew Page “impressive” and said they had “a robust track record”.

“The fund follows the simple philosophy that those companies with a history of generating high returns on capital are both likely to perform relatively well and exhibit consistent dividend growth.”

It targets a more moderate dividend yield than other IA Global Equity Income funds, prioritising year-on-year dividend growth, which it has achieved every since year inception bar 2020, when the entire equity income market had a torrid time due to Covid.

Investing in quality businesses has “proved to be resilient in market downturns”, analysts said.

“Square Mile believes this fund to be suitable for investors seeking a growing dividend stream from a global mandate, but with a total return mindset and a lower volatility profile than the broader market.”

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The other promotion, Rathbone Multi-Asset Portfolio Range, will see its Defensive Growth, Strategic Growth, Dynamic Growth and Enhanced Growth portfolios joining the Total Return portfolio in the Academy of Funds.

The latter already held an A rating, which will now be revised to a to a Recommended rating to align it with the other funds in the range.

Star attraction of this range for the analysts was manager David Coombs, “who has proved his ability as an astute asset allocator and portfolio constructor over several years”.

“In addition, his long-standing investment process has helped him successfully tilt the portfolios to the prevailing market conditions, making a meaningful contribution to the performance of the range since launch.”

Indeed, given the current state of equity markets, Square Mile said the range could be a “compelling option for investors seeking to grow their capital over the longer term in a risk-controlled fashion”.

The final notice was that the SVM UK Opportunities fund would retain its A rating, following the announcement from AssetCo PLC that it had conditionally agreed to acquire the asset manager.

Analysts declared that although this ownership change would likely cause material changes at a corporate level, they do not foresee any change to the underlying philosophy and process applied by the fund’s manager Neil Veitch, although they will closely monitor the situation as it progresses.

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