standard & poor's defends against criticism following horizon pacific fund downgrade
Henderson's has challenged the loss of a Standard & Poor's AAA rating on its Horizon Pacific Equity fund and questioned the logic of ratings agencies.
The fund's rating was dropped to A due to manager Heather Manners' prolonged absence through illness.
The ratings agency also cited the loss of Kirsteen Morrison, who moved to cover ethical mandates and the fund's relative performance, as reasons for concern.
Simon Ellis, head of retail at Hendersons, said the rating drop was a shock because the fund had been upgraded by Forsyth to a AA.
He criticised the change and said ratings agencies were sometimes a 'law unto themselves.'
The fund is rated AA by Forsyth, but there has been no re-rating since this year. Forsyth also has the fund's rating under review due to the long-term absence of Manners.
Standard & Poor's report on the rating drop said it was due to: 'Twenty months of disappointing stock selection and the loss of several experienced and successful fund managers.'
It added: 'Although the team of eight is relatively experienced, this is a highly tactical, high flair fund and the loss of those two team members is significant.' It also said that the recent relative performance of the fund has been disappointing with bottom quartile returns in 2001 caused by 'buying into the false rally in January and by an over defensive position after the US terrorist attacks' and that in the first quarter 2002, stock selection proved difficult.
Ellis criticised the rating fall on several counts.
While Manners has been on long-term sick leave since the end of the first quarter this year, the fund has been managed by co-manager John Crawford, he said. Manners is still employed by Hendersons and will return to work when she can.
Crawford and Manners have co-managed the fund, which launched in 1985, since May 2001.
Morrison, who was based in the firm's Singapore office, left the team two years ago and was replaced by a local national.
The fund's team has not shrunk and apart from a 'blip' in performance in April and May, due to specific stock bets that were taken off fast, and from which the fund has since recovered, there have been no investment problems, according to Ellis.
According to Standard & Poor's statistics, the fund is ranked 28 over three years with performance of -8.26, and 134 over one year with performance of 5.11.
Subset of fintech
Just one-fifth not in favour
Member of PRA's practitioner panel
Risk to retail investors