Two strategies offered by Investors Mutual have been hit with downgrades in research house Morningstar's latest review of Australian equities smaller companies managers.
The Investors Mutual Future Leaders and Australian Smaller Companies strategies were both downgraded to recommended from highly recommended.
"Investors Mutual's shift down from highly recommended to recommended was because of questions about ongoing team stability following personnel changes from 2006-10," Morningstar's report said.
"We still believe that these are quality options, though, given the continued presence of long-time portfolio manager Simon Conn and the value-driven, low-turnover approach that remains true to label."
Morningstar also downgraded the recommendations on EQT/SG Hiscock and Australian Ethical's smaller companies strategies to avoid.
"Australian Ethical was downgraded because of its relatively inexperienced staff and light research. We also downgraded the EQT/SG Hiscock strategy because of a lack of faith in the portfolio risk controls," the report said.
Smallers companies strategies offered by Pengana, Perennial, UBS, ING, Hyperion and Aberdeen were upgraded by Morningstar due to the research house's greater conviction in the team and investment process of the managers.
Pengana's strategy was upgraded to highly recommended from recommended.
"We upgraded Pengana because of our growing confidence in the leadership and skills of portfolio managers Steve Black and Ed Prendergast, intuitive investors who are among the best stockpickers in the business," the report said.
Perennial, UBS and Hyperion's strategies were upgraded to recommended, while Aberdeen and ING's strategies were upgraded to investment grade.
