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Investment fund downgrades from the Japanese, Emerging Markets and Specialist sectors

We have recently downgraded the star ratings of a number of investment funds under our research coverage. This is to focus on funds that we have conviction in. Our latest batch of downgraded funds is from the Japanese, Emerging Markets and Specialist sectors.

Ajay Vaid Ajay Vaid
03 May 2017

The rationale behind downgrading funds

We are withdrawing future research coverage on the below funds and focusing on alternative investment ideas from the Japanese, Emerging Markets and Specialist sectors. The funds we’re downgrading may also be unmatched with our current house views and investment philosophy.

We have given each of the downgraded funds a one-star ‘switch’ rating to reflect the withdrawal of future coverage. This means that there are fund ideas that we have more conviction in and will benefit from our ongoing monitoring.

To see our top-rated funds, including funds from the Japanese, Emerging Markets and Specialist sectors, please visit here.

Aberdeen Emerging Markets Equity – 2 stars to 1 star

This fund invests with a conservative approach in quality companies but the fund’s approach has not met our expectations in recent years. Our preferred options are Somerset Emerging Markets Dividend Growth and Fidelity Emerging Markets.

Aberdeen Global Emerging Markets Equity – 2 stars to 1 star

This fund is an offshore version of Aberdeen Emerging Markets Equity. The fund's approach has not met our expectations in recent years. Our preferred options are Somerset Emerging Markets Dividend Growth and Fidelity Emerging Markets.

Aberdeen Global Emerging Markets Smaller Companies – 2 stars to 1 star

This fund follows the same investment approach as the above two Aberdeen funds. Our preferred options are Somerset Emerging Markets Dividend Growth and Fidelity Emerging Markets.

GAM Star Technology – 3 stars to 1 star

We don’t give star ratings to single-sector funds due to their higher risk and as our investment process eschews market timing. Our preferred option for technology exposure is Loomis Sayles US Equity Leaders.

JO Hambro CM Japan – 4 stars to 1 star

The managers Scott McGlashan and Ruth Nash invest with a contrarian style in small and mid-cap companies. They look for undervalued companies where there is a catalyst for a re-rating. The fund has lagged the market for the last couple of years and we have higher conviction in funds that we believe will offer better returns in the long term. Our preferred options are Schroder Tokyo and CF Morant Wright Japan.

JPM Emerging Markets – 3 stars to 1 star

The fund aims to invest in companies with long-term growth potential whilst trading at reasonable valuations. In recent years, the fund has lagged in falling markets and therefore has not met our expectations. Our preferred options are Somerset Emerging Markets Dividend Growth and Fidelity Emerging Markets.

Jupiter Financial Opportunities – 4 stars to 1 star

We don’t give star ratings to single-sector funds due to their higher risk and the fact that our investment process eschews market timing.

Polar Capital Global Insurance – 3 stars to 1 star

Despite the fund’s quality investment process, which has provided good returns, we no longer give star ratings to single-sector funds.

Templeton Frontier Markets – 3 stars to 1 star

This fund invests in the smaller, more risky end of the Emerging Markets spectrum. We do not believe in investing in funds within this market due to the high risk carried. Our preferred options are Somerset Emerging Markets Dividend Growth and Fidelity Emerging Markets.

Get in touch if you have any questions

If you would like to know more about our recent fund downgrades or you have questions about your investments in general, please call on 020 7189 2400, email best@bestinvest.co.uk or request a call back.

Important information

This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. Underlying investments in emerging markets are generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could both increase or decrease. These investments therefore carry more risk. Due to their nature, specialist funds can be subject to specific sector risks. Investors should ensure they read all relevant information in order to understand the nature of such investments and the specific risks involved.