By Alec Hogg
Nedbank’s “best of breed” approach to selecting money managers for its clients scored a significant victory yesterday. Its R10bn Nedgroup Investments Global Flexible unit trust was given a five star rating by the influential Morningstar team, putting it into the top 10% of unit trusts worldwide.
This is the best possible debut for the previously unrated fund which for the past four years has been managed by US-based investment boutique FPA. Morningstar Analyst Barbara Claus concluded: “The managers’ experience, patience and independent investing style make this fund an appealing option.”
The “gold” rating for the Nedbank fund came on the same day Morningstar dropped one-time money management darling Neil Woodford to the bottom of its pile. It downgraded the LF Woodford Equity Income fund to a single star, putting the fund among the bottom 10% of unit trusts globally because of underperformance and a problematic portfolio structure.
Morningstar introduced its ratings system in 1985 and it’s easy to understand star system is applied to 3 900 unit trusts worldwide. Its scores are a favourite of investors everywhere and have a significant impact on money flows. But as the Nedbank team celebrates this plaudit its members should remember a ratings knife cuts both ways. As Woodford well knows.
