Research house Standard & Poor's (S&P) has kept its highest rating on funds managed by Capital International and MFS Investment Management and downgraded Advance Asset Management as part of its review of international core equity funds.
Capital's Global Equities Fund and the MFS Global Equity Trust continued to hold a five-star rating for the continued quality of their research. Both products' hedged versions also are rated five stars.
Capital recently changed its multi-portfolio manager approach to using four global equity portfolio managers with broad mandates including emerging markets, S&P said.
Capital previously used six portfolio managers, half of which managed portfolios on a regional basis.
"Using portfolio managers with more flexible mandates means larger positions can be held in the manager's best stock ideas," S&P fund analyst Justine Gorman said.
"Although portfolio managers are constructing more concentrated portfolios than previously, at the aggregated level the fund remains well diversified. Investors may experience a slightly higher level of tracking error."
S&P kept its rating on the MFS Global Equity Trust even after Roger Morley was appointed as new co-portfolio manager in April 2009, following Simon Todd's departure in October 2008. Morley manages the product with David Mannheim.
"The fund will continue to invest in companies that exhibit sustainable earnings growth and operate in industries less sensitive to economic instability," Gorman said.
Advance's Wholesale International Sharemarket Fund, whose underlying manager is The Boston Company, was the only fund in S&P's review to be downgraded. Its rating was shrunk from three stars to two.
"Despite the relatively experienced research team of 10 analysts, S&P considers that the team is a little thinly spread with regard to its research coverage compared to global equity peers," Gorman said.
S&P would also like to see greater stability in the team in the future, she said.
Colonial First State's Wholesale Global Share Fund was upgraded to four stars from three, as was the Generational Wholesale Global Sustainability Fund.
Nine managers with a total of 14 capabilities were rated as part of S&P's review.
