Fund Analyst Rating: Candriam Biotechnology


Welcome to the Morningstar Manager Check-up
for three fund updates from our analyst team. The JPMorgan Asean fund has been run by Pauline
Ng since its launch in October 2010. She’s supported by a stable and well-resourced five-member
ASEAN team with 12 years of investment experience on average. They can also draw on the wider
100-plus analyst bank covering emerging-markets and Asia-Pacific. The fund employs a proven,
quality-focused investment approach that combines top-down views with bottom-up analysis. While
stock selection generates most of the alpha, we think that the incorporation of country
views is a sensible way of investing in ASEAN markets, as countries tend to exhibit idiosyncratic
risks. Since the fund’s inception, it has delivered
excellent returns, comfortably beating its benchmark and peers. Overall, an experienced
lead manager, a well-resourced supporting team, a proven investment process that has
yielded excellent long-term returns, and a cheap fee have led us to maintain the fund’s
Morningstar Analyst Rating at Silver. The Troy Trojan Income fund has been managed
by Francis Brooke since launch in 2004. Brooke constructs a relatively concentrated portfolio
of “quality” companies that must meet strict criteria before being considered for
investment. The focus is on FTSE 350 names, and Brooke tends to maintain a far greater
weighting in large caps than the category average. The focus on quality at the stock
level also results in some clear biases at the sector level.
This means the return profile tends to see underperformance in sharp rallies, but the
fund holds its own in tougher markets, such as those we’ve been experiencing lately.
What you’ve seen over the long term, however, is that this is one of the most attractive
funds in the sector on a risk/reward basis. With a seasoned manager who has consistently
applied a well-defined, conservative, low-turnover approach, the fund retains a Morningstar Analyst
Rating at Silver. The Candriam Biotechnology fund has been run
by Rudi Van Den Eynde since launch in 2000. He works with a small team in this specialist
field, where qualitative in-depth research and a deep understanding of clinical data
are the core of this well-designed process. The analysis starts with a preliminary screening
to study themes and trends within the biotech sector.
The analysis is primarily bottom-up-focused and the team constructs a well-diversified
portfolio, which consists of large-cap stable growers combined with a tail of smaller bets
on riskier industry innovators. The fund’s track record has put it among the top quartile
of its Morningstar Category over three, five, 10, and 15 years. As we have a high conviction
in the team members, the manager’s deep knowledge of the space and their execution
of a well-structured process, the fund deserves its Morningstar Analyst Rating of Silver.