Standard & Poor's Fund Research has cut the ratings of the Mercury Emerging Markets and Hill Samuel ...
Standard & Poor's Fund Research has cut the ratings of the Mercury Emerging Markets and Hill Samuel Global Emerging Markets unit trusts.
Mercury Emerging Markets' rating has been reduced from frAAA to frAA due to the fund's disappointing performance over the past two years.
Over the three years to 28 June the fund is ranked 19 out of 30 in the global emerging markets sector on an offer to bid basis.
During the period it fell by 13.1% compared to an average fall of 8.4%.
Hans Hamre, global emerging markets analyst at Standard & Poor's, said that despite the poor performance, the Mercury team is still one of the largest in the sector. This gives them the capacity to undertake detailed research, supporting Hamre's high qualitative assessment of the fund.
Hill Samuel Global Emerging Markets, which was rated frA, was put under review in March in light of the merger between the management group and Scottish Widows.
Hamre said the fund was de-rated due to the uncertainty over the future management process.
Last week, Alan Boorer left Hill Samuel, coinciding with the formal transfer of business from Hill Samuel to Scottish Widows. Boorer had been running the fund since December 1993.
The new manager is Kim Catechis, who is head of emerging markets at Scottish Widows Investment Partnership, the new name for Hill Samuel's and Scottish Widows' merged fund management operation.
The Hill Samuel Global Emerging Markets fund has outperformed Scottish Widows Emerging Markets over three years on an offer to bid basis. Boorer's fund fell by 10.6% while the Scottish Widows fund declined by 30.4%.
For the same reason as Hill Samuel Global Emerging Markets' lost its rating, Stewart Ivory Emerging Markets unit trust has been de-rated from frAA to frA.
Angus Tulloch continues to run the fund from Edinburgh even though the takeover of Stewart Ivory by Colonial First State has split the management of assets between London and Edinburgh.
Hamre said: "Although the approach and team driven process remain consistent, we are concerned by the potential distraction arising from the integration of the groups and the dual location of the teams."
The £45m Gartmore Emerging Markets unit trust has achieved a rating for the first time, frAA.
There has been significant improvement in the fund's track record since the arrival of Philip Ehrmann as manager and desk head in 1995, according to Hamre.
He said Ehrmann has introduced a new process to global emerging markets focusing on companies with an unexpected earnings growth within a macroeconomic overlay.
Hamre added: "The approach is flexible, based on the stage of the economic cycle. It may be driven by specific research as in the current investment climate, or by the macroeconomic view as in 1998."
Along with the unit trust, the group's offshore Oeic sub-fund Gartmore CSF Emerging Markets was given an frAA rating.
The fund has UK distributor status and so is listed in the Global Emerging Markets sector alongside the unit trust.
Over three years the Oeic sub-fund is ranked three out of 30, on a rise fof 11% while the unit trust is ranked five, a rise of 8%.
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