The fund was upgraded to a Gold Rating in February 2016. Morningstar notes it is difficult for active managers to outperform US large-cap benchmarks, so taking a passive investment approach to this asset class makes sense. This S&P 500 tracker provides a low cost way of gaining access to US equities, and has done an excellent job of tracking its benchmark in recent years. In addition to lowering fees, HSBC has demonstrated a commitment to its passive fund business by allocating more resources to technology and employing more people. Considering all these factors Morningstar decided to upgrade the fund.
The fund was upgraded to a Silver Rating in February 2016. The strategy is managed according to a highly disciplined investment process, which has been executed diligently and consistently over time by the team, both at Man GLG and in its previous guise at Matterley. The team, headed up by Henry Dixon, has bedded in well since its move to Man GLG in October 2013, which has helped to increase Morningstar’s level of conviction.
The fund was downgraded to a Bronze Rating in February 2016. While Morningstar emphasises the fund’s excellent tracking ability and low fees, it highlights the fact it is tied to a rules-based benchmark with long duration which will be highly vulnerable in down markets relative to category peers with the ability to tweak their duration. The change in rating more accurately reflects Morningstar’s degree of conviction of the fund’s ability to consistently outperform its category peers.
Most of the funds on our TD Recommended List hold a Morningstar Analyst Rating of Gold, Silver or Bronze. These ratings indicate that the fund is likely to outperform its respective peer group according to Morningstar. Ratings are only awarded following extensive due diligence by Morningstar’s analysts which includes meeting with the fund management team, assessing the investment process, portfolio, price and performance of the fund through the whole market cycle
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