invesco perpetual european growth and framlington european both stripped of ratings
Standard & Poor's has pulled its research ratings from a number of European ex-UK funds, including those run by M&G, Invesco Perpetual, Newton, Framlington and Scottish Widows, following continued underperformance.
Along with Invesco Perpetual European Growth, other funds to lose their ratings include the formerly A-rated Framlington European, which has been managed by Mark Hargreaves since Caspar Rock moved to manage other funds within the group.
Swip's Hill Samuel European Trust dropped from A to unrated, along with the Scottish Widows European Fund.
The M&G European Fund, Mellon Global Funds ' Continental European Equity Portfolio, Newton Continental European and Newton OSF European Assets, all failed to retain ratings.
Mark Pignatelli's Schroder European Fund slipped one rating band to A following a year of weak performance in the research rating group's latest analysis of the sector.
Debbie Boys, head of the Europe desk at S&P, said: 'Our belief is that this fund continued to suffer through the year because Pignatelli took his eye off the ball while he tried to create a more robust process that would work in a variety of conditions.
'He acknowledged that performance would have been stronger had he trusted his normal criteria, including momentum analysis.'
Another fund that slipped in ratings was the AAA-rated Mercury Offshore Selected Trust ' European Fund, which has fallen to AA. The fund's manager, Michel Legros, has recently taken on a number of high performance funds, including the group's onshore European Dynamic fund and a hedge portfolio, causing S&P concern that he may be overstretched.
Nine funds in the Europe ex-UK sector achieved AAA ratings from S&P. Gartmore, Henderson and Fidelity confirmed their continuing strength in the European equities market and, together with Investec, the groups boast 13 of the 15 AAA ratings in the Europe ex-UK and pan-European fund sectors.
Fidelity European, Investec European and its offshore IGSF Continental European funds all moved up to AAA, while Gartmore European Selected Opportunities, Threadneedle European Select Growth and Henderson Horizon European retain their AAA ratings.
Jupiter received an upgrade for Jupiter European and was awarded an A rating on its European Special Situations fund for the first time. The AA on Alex Darwall's European portfolio is due to S&P's better knowledge of the manager and his performance on the fund since taking it over in January 2001 after Richard Pease left the group to join New Star.
In looking at the sector as a whole over 2001, Boys noted, with very few exceptions, the stars of the 2002 review are those managers that lost their clients less, rather than those that made them more. The group noted that between September 2000 and September 2001, European markets lost 38% of their value, making outperformance difficult.
Boys added that many managers in the bottom decile were those that were misled by the cut in US rates at the start of 2001 into anticipating a cyclicals led return to an uptrend in equities. The worsening US outlook and the failure of the ECB to cut rates until June led to severe underperformance in funds that persisted with this strategy.
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