ii Super 60 investments

Removal of Premier Miton US Opportunities Fund

The co-manager of Premier Miton US Opportunities, Nick Ford, has retired. The experience and tenure of Ford, and his co-manager Hugh Grieves had been key to our conviction in this fund. With the external hire of a new-comanager there is potential for changes in the qualitative elements of the process. We therefore have reduced conviction levels in the fund at this time and are removing from our Super 60 list.

Removal of M&G Global Macro Bond Fund

The retirement of manager Jim Leaviss results in the M&G Global Macro Bond fund being removed from the Super 60. Although supported by a strong team, his views have been central to the macro-driven positioning of this fund. While the supporting resources remain a positive, there is an element of uncertainty regarding the approach under the new co-managers and we therefore no longer view the fund as one of our highest conviction ideas.

M&G Global Macro Bond Fund - Under Review

Following the announcement that manager, Jim Leaviss, is departing from M&G after 27 years with the business, we have taken the decision to place the M&G Global Macro Bond Fund under review. Leaviss has managed the strategy since its inception in September 1999.

Eva Sun-Wai and Robert Burrows will co-manage the fund going forward. Eva Sun-Wai has been co-manager on this fund since January 2021 and been with M&G since 2018. Robert Burrows, who joined M&G in 2007, is a fund manager specialising in government bond and macro fixed income mandates.

Premier Miton US Opportunities Fund - Under Review

Following the announcement that manager, Nick Ford, is planning to retire from fund management duties in September 2024, we have taken the decision to place Premier Miton US Opportunities Fund under review.

Alex Knox of Federated Hermes will join Premier Miton in August in order to co-manage the fund going forwards alongside the other existing manager, Hugh Grieves, who has co-manged the fund alongside Nick Ford since the fund’s inception in 2013

Removal of Balanced Commercial Property Trust

Following the announcement on 15th April 2024 that the board of Balanced Commercial Property Trust will be undertaking a strategic review of the options open to the company, we placed the investment trust Under Review on 19th April 2024. Ahead of the company’s continuation vote later in 2024, the board is considering the best available options for shareholders to tackle the difficult property market backdrop and its persistent discount. Stated options include actions to narrow the discount, sale of the company’s assets, a change of investment strategy, amongst others. The outcome of the board’s review is expected to be published in Q3 2024.

Given the degree of uncertainty over the future of the trust and the portfolio strategy, we have decided to remove it from the Super 60. Customers who are looking to gain exposure to commercial property could consider TR Property Investment Trust which is on the Super 60. It’s a hybrid offering, investing in both in the shares of property companies and physical property.

Super 60 Annual Review 

Removal of Man GLG Continental European Growth Fund

Following the Annual Review of the Super 60 fund list we are removing the Man GLG Continental European Growth fund. Although this fund benefits from positives such as its experienced manager, Rory Powe, its significant growth style bias leads to variable returns when compared to mainstream peers. There are more compelling options available where the return profile relative to mainstream peers is more consistent. We therefore no longer view this fund as one of our highest conviction ideas.

Removal of Artemis SmartGARP Global Equity Fund

Following the Annual Review of the Super 60 fund list we are removing the Artemis SmartGARP Global Equity fund. The recent announcement that senior manager Peter Saacke is to retire from fund management in June 2024 adds weight to our view that better options are available to investors in the global equity space that have a value bias in terms of investment approach. We no longer view this fund as one of our highest conviction ideas.

Removal of Murray International Trust

Following the Annual Review of the Super 60 fund list we are removing the Murray International Trust. The fund was placed under review on 12th September 2023 on the basis of the news that Bruce Stout has announced that he will retire from the management of Murray International in June 2024, with his two co-managers Samantha Fitzpatrick and Martin Connaghan taking control. Although we do not see significant change to the portfolio in the short term, with Stout remaining in place until June 2024 and the trust having a low turnover style, we have reduced conviction levels in the longer-term outlook and feel stronger other options are available.

Removal of Morgan Stanley Global Brands EquityIncome Fund

Following the Annual Review of the Super 60 fund list we are removing the Morgan Stanley Global Brands Equity Income fund. This fund is managed with a derivative overlay which effectively exchanges some potential upside on individual stocks for an income stream. In a low yield environment this approach provides a useful way of generating income, however, it can result in lower total returns over time. With yields having increased, our view is that most investors are better served by looking for natural income streams from equities, bonds or cash. We therefore no longer view this fund as one of our highest conviction ideas.

Removal of Lindsell Train Japanese Equity Fund

Following the Annual Review of the Super 60 fund list we are removing the Lindsell Train Japanese Equity fund. The manager of this fund is highly experienced and operates a process that is focused on companies he regards as high-quality, cash generative and with easily understood business franchises. The fund is concentrated by number of holdings and at the sector level, where over 45% of the fund is held in consumer staples. This positioning is persistent and in line with the investment philosophy, but it does result in the fund being a niche product that is exposed to significant risk compared to peers and the wider market. We are therefore removing the fund from the list with a view to replacing it with products that have wider appeal.

Removal of Fidelity Multi Asset Income Fund

Following the Annual Review of the Super 60 fund list we are removing the Fidelity Multi Asset Income fund. The fund was placed under review on 11th October 2023 following the recent announcement of the retirement of fund manager Eugene Philalithis. Philalithis will be replaced by Talib Sheikh who joined Fidelity in November and will assume lead manager duties for this fund in January 2024, supported by the existing team. We no longer view this fund as one of our highest conviction ideas.

Removal of Royal London Sterling Extra Yield Bond Fund

Following the Annual Review of the Super 60 fund list we are removing the Royal London Sterling Extra Yield Bond fund. In the current higher-rate environment lower-risk products have become more attractive and we have been keen to reflect this within the Super 60. For UK investors, we think it is particularly appropriate to add lower-risk options within the sterling credit space and we are therefore removing this higher-risk sterling credit fund to allow the addition of these new funds. We retain a positive view on the team at Royal London, but at the current time our highest conviction ideas from the group are a lower-risk sterling credit fund and a higher-risk global credit fund, both of which are on the Super 60 list.

Removal of Rathbone Ethical Bond Fund

Following the Annual Review of the Super 60 fund list we are removing the Rathbone Ethical Bond fund. We are removing this fund from the Super 60 list as it features on our dedicated sustainable list, the ACE 40.

Removal of GAM Star Credit Opportunities Fund

Following the Annual Review of the Super 60 fund list we are removing the GAM Star Credit Opportunities fund. The fund was placed under review on 11th October 2023 in light of uncertainty surrounding the latest developments with regard to the future of GAM. This fund is sub-advised by third-party manager Atlanti and distributed by GAM and its management has therefore been insulated from the GAM-level turmoil to some degree. But the uncertainty at GAM continues and is a concern. Given these concerns we therefore no longer view this fund as one of our highest conviction ideas.

Removal of Jupiter UK Special Situations Fund

Following the Annual Review of the Super 60 fund list we are removing the Jupiter UK Special Situations fund. The fund was placed under review on 10th January 2024 on the basis that Jupiter announced that Ben Whitmore, lead portfolio manager of the Jupiter UK Special Situations fund, will be leaving the group at the end of July 2024 to  establish a value equities boutique. Dermot Murphy, a co-manager on the strategy, and Claudia Ripley, an investment director, will also be leaving Jupiter. To replace Whitmore, Jupiter is hiring Alex Savvides from JO Hambro Capital Management. Savvides is expected to join Jupiter and take over this fund in autumn 2024. Further details are required over the timing of the handover, the new investment process and resourcing before committing to the fund as a best idea on the Super 60. We are therefore removing the fund from the list at the current time.

Inclusion of Capital Group New World Fund as Core Emerging Markets option

We are adding the Capital Group New World fund as a high conviction option on the Super 60 fund list. The fund is managed utilising a multi-manager approach with the assets divided between 12 managers who independently run parts of the portfolio. Nine of the managers, focus on equities, one on fixed income and one managing a multi-asset portfolio. Overall, the firm’s multi-manager approach is a strength and this together with a strong analyst bench help to mitigate key person risk. The fund offers investors a differentiated approach to investment opportunities in emerging market equities and rather than being a pure play on emerging markets equity, can invest in any company that has 20% of its asset or generates at least 20% of its revenues from the developing world. At least 35% of the fund must be invested in emerging markets domiciled firms and between 3% and 17% has been invested in emerging market debt. This provides the managers with a larger opportunity set than most emerging markets strategies and the potential to reduce the volatility associated with investing in the region. The fund is measured against both the MSCI Emerging Market Index and the MSCI All Country World Index. Capital Group have a long and strong track record of successfully managing funds using their multi-manager approach and have over the years proven their ability to successfully transition new managers onto their strategies. This fund is a strong choice for investors looking for emerging market equity exposure but with lower volatility.

Inclusion of Fidelity European Fund as Adventurous European Equities option

We are adding the Fidelity European fund as a high conviction option on the Super 60 fund list. This fund benefits from a highly experienced manager in Sam Morse. Morse has been managing money in a similar style since 1994 and has been at the helm of this strategy since December 2009. He draws heavily on the work of the Fidelity analyst team for idea generation and monitoring, and as an input into his research process. Morse has developed his own stock selection criteria focusing on a company’s ability to grow its dividends, which is viewed as an indicator of the potential to provide steady cash flow growth over the long term. Management’s ability to effectively allocate capital, balance sheet strength, high barriers to entry and proven, cash-generative business models are also key. Valuation is used to adjust position sizes, with outright sales generally triggered by fundamental change. Factor risks are monitored, and sector weightings not straying to far from the MSCI Europe ex-UK Index in being  limited to +/-5%. Returns have been strong over time, with downside protection often being a feature, but the fund is likely to struggle when value stocks lead the market. The experience of the manager, the extensive analytical support and the proven nature of the investment process employed on this fund result in it being an attractive option for those wanting quality-growth exposure to Europe ex-UK equities

Inclusion of Dodge & Cox Worldwide Global Stock Fund as Adventurous Global Equities option

We are adding the Dodge & Cox Worldwide Global Stock fund as a high conviction option on the Super 60 fund list. This fund benefits from a considerable depth of management experience and continuity of management with most of the investment professionals becoming partners in the firm. The fund invests in mostly large-cap stocks that look cheap on a range of valuation measures. The approach relies on bottom-up, fundamental research of companies and industries and favours business with good management, competitive advantages, and good growth potential. These may also be businesses that are under a cloud at the time of purchase. The managers are benchmark agnostic and returns can show large divergence from the MSCI World Index on a calendar year basis. However, taking a long-term view has enabled them to outperform the benchmark over the long term. This is a genuine team-based approach with members of the portfolio committee having long tenures but not close to retirement. The quality of the supporting analysts is high and team risks are low. A collaborative approach minimises key-person risk yet has produced thoughtful, original research.

Inclusion of GQG Partners Global Equity Fund as Adventurous Global Equities option

We are adding the GQG Partners Global Equity Fund as a high conviction option on the Super 60 fund list. The fund is managed by Rajiv Jain who established GQG Partners in 2016 after a long and successful career at Vontobel Asset Management where he managed both Global and Emerging Market equity strategies. Sudarshan Murthy and Bian Kersmanc support him as portfolio managers on global mandates and they are also supported by the firm’s wider team of 20 analysts and managers. The mangers have a growth-oriented outlook but in seeking to achieve this they adopt a flexible, medium-term investment approach and consider limiting losses a priority. Consequently, they look for companies that are on a solid financial footing, have weathered tough economic climates and whose industries are growing rather than stagnating. They use fundamental analysis to research future growth opportunities, estimate risks, analyse the accounting to ensure its accuracy and transparency, and then estimate a reasonable price. The portfolio typically comprises 40-50 names and pays little attention to the wider marketin its portfolio construction. The manager’s flexible investment approach and quality bias have typically led to strong performance through the market cycle with good downside protection during periods of market weakness. The fund benefits from an experienced manager, with a flexible, proven and well-executed investment process

Inclusion of Bankers Trust as Core Global Equity Income option

We are adding Bankers Trust as a high conviction option on the Super 60 fund list. This fund has been managed by Alex Crooke since 2003. Crooke is co-head of equities at the group which puts him in a good position to manage this fund. Crooke determines the asset allocation for the trust in concert with the six members of the board, and then draws upon the expertise of fellow managers at Janus Henderson for stock selection in the various geographic sleeves. Only the best ideas will end up in the portfolio. However, in total there are more than 150 positions in the trust. The sub-managers all run their own strategies at Janus Henderson, which unavoidably leads to slight style biases in their respective allocations.  Each sub-manager are assigned an income target by Crooke.Income growth is a big focus, which has led to the long-running home bias to UK stocks, whose attractive dividend yields, undemanding valuations, and global revenue streams satisfy the mandate. On the flip side, the long-running underweighting to the United States reflects the share buyback culture in that market and relatively high valuations. These biases will impact returns at times. This trust represents a good option for those looking for a growing dividend income and benefits from the backing of a strong team. It is a dividend hero, having increased income payouts for the past 56 years in a row.

Inclusion of Man GLG Japan Core Alpha Fund as Adventurous Japanese Equity option

We are adding the Man GLG Japan Core Alpha fund as a high conviction option on the Super 60 fund list. Jeff Atherton took over as lead manager for the fund in January 2021 following the retirement of the fund’s long-standing manager Stephen Harker. Atherton is, however, well versed in the fund’s investment philosophy and process having worked with Harker on this team since 2011 and previously at TCW from 2001. He is supported by portfolio manager Adrian Edwards and two analysts. The managers adopt a distinct value and contrarian bottom-up investment approach (focusing on company fundamentals) that is driven by the belief that cyclicality is a strong influence in virtually every sector of the market and that periods of underperformance are often followed by periods of outperformance. This means that they tend to buy stocks when they are unloved and increase their weighting as the stock price falls further while remaining patient until the value is realised. There have been some refinements to the investment process under Atherton, including giving more prominence to catalysts, and to some quality metrics, such as return on equity and quality of earnings which are essentially risk controls. . This is accompanied by a slight reduction in risk, with the manager now aiming for a slightly larger number of holdings, and a modestly reduced concentration in the top 10 holdings. The process enhancements should lead to a slightly higher-quality portfolio without sacrificing the contrarian-value nature of the guiding investment philosophy. The fund’s value bias will clearly influence returns over the shorter term, but the strategy has shown longer-term success. We view the process enhancements positively and feel the fund is a compelling choice for investors seeking exposure to value stocks in Japan

Inclusion of Invesco Sterling Bond Fund as Adventurous Sterling Bond option

We are adding the Invesco Sterling Bond fund as a high conviction option on the Super 60 fund list. Michael Matthews has been responsible for this fund since June 2008 and has been part of the team since 1995. Support is provided by an experienced team of 19 further portfolio managers and analysts. The approach is differentiated from peers as it is flexible and pays little attention to the benchmark index, with no formal constraints on sector or geographical exposure. The manager places a great deal of emphasis on understanding the current macro picture and uses top-down forecasts to guide duration positioning (duration is a bond’s sensitivity to interest rate change). In terms of assessing the fundamentals among the things scrutinised are individual companies' creditworthiness, risks.. The portfolio is constructed around three buckets: liquidity, defensive, and credit risk. The defensive bucket is the core of the portfolio, comprising non-financial investment-grade corporate bonds and senior bank debt. The strategy has a minimum allocation of 50% to sterling investment-grade corporate bonds and can invest up to 50% in high-yield bonds. Matthews may tactically hold cash and highquality government bonds for defensive purposes. Foreign-currency exposure is typically hedged back to sterling. Duration is managed actively and has fluctuated between 3.0 years and 6.6 years in the recent past. The fund’s flexible mandate can lead to significant performance deviations compared with peers, but the manager has used it adeptly over the long term. The fund benefits from its experienced lead manager, the support of a well-resourced and stable credit analyst team, and a team-oriented process. The approach differentiates the strategy from peers as it is flexible.

Inclusion of Royal London Corporate Bond Fund as Core Sterling Bond option

We are adding the Royal London Corporate Bond fund as a high conviction option on the Super 60 fund list. The fund’s two named managers are Shalin Shah and Matt Franklin. Shah joined the team in mid-2008 and has been a co-manager on the strategy since October 2016, taking on responsibility following the departure of long-standing manager Sajiv Vaid. Franklin was added as co-manager in January 2022 having been a member of the Sterling Credit team for eight years. Head of fixed income Jonathan Platt is no longer a named manager but will continue to provide strategic input and challenge the other managers as head of fixed income. The investment process starts with a review of the macro environment to identify the most attractive credit markets. This is followed by in-depth credit research, with a heavy emphasis on bond covenants and structure, which forms the core of the strategy. This has led to a bias towards secured bonds historically in sectors such as social housing, investment trusts, and asset-backed securities. While more than 80% of the fund typically consists of agency-rated "high-profile" bonds, the team members actively look for under-researched "low-profile" bonds (including unrated bonds) that offer higher return potential, in their view. The strategy's long-term horizon allows it to exploit the illiquidity premium built into these bonds, but diversification across 250-350 holdings helps reduce specific issuer risk. Returns on an absolute and risk-adjusted basis have been consistent over multiple years. Managers are backed by a collegial team led by veteran Jonathan Platt, who employs a time-tested, team-based approach. The strong performance reflects a focus on under-researched bonds and the long-term approach

Janus Henderson European Selected Opportunities Fund - Retained

Janus Henderson European Selected Opportunities Fund was placed under review in September 2023 following the announcement of the retirement of longstanding manager John Bennett. Following review, we are retaining the fund on the Super 60 list. We continue to have a high level of conviction in this fund due to the well-managed transition to his co-managers Tom O’Hara and Tom Lemaigre. Both were selected by Bennett in 2018 and we have seen them gradually taking more control of the portfolio over time. They have adopted the robust and disciplined investment process developed by Bennett and there is clear evidence of them successfully implementing both individual stock selection calls and more contrarian economic driven shifts in portfolio positioning. We believe the fund remains in talented hands and is a compelling option for those seeking a core fund for continental European equity exposure.

Janus Henderson European Selected Opportunities Fund- Under Review

Janus Henderson announced that John Bennett, lead manager on the Continental European, European Focus, and European Selected Opportunities strategies, would be retiring at the end of August 2024. Bennett has been with Janus Henderson for 12 years of his 43-year career. He was named portfolio manager in 2010 and will continue to work with the team over the next 12 months to ensure a smooth transition. His replacements will be Tom O'Hara and Tom Lemaigre, who have worked closely with Bennett for five years. O'Hara was named a comanager in 2020, and Lemaigre in 2022. As a result of this announcement, we have placed the Janus Henderson European Selected Opportunities fund under review while we evaluate the change to the investment team.

Inclusion of JPM UK Equity Core Fund as a Core UK Equities Option

The JPM UK Equity Core Fund will be added to Super 60’s UK Equities category as a “Core” option. This fund aims to provide consistent returns moderately ahead of the FTSE All-Share Index at reasonable cost. It does this by being benchmark aware, meaning it does not deviate significantly from the index, following a structured and risk-controlled approach. The fund applies a quantitative (mathematical) approach as part of its stock selection process which is overseen by a four-strong management team who are able to draw upon research from the well-resourced JPMorgan International Equity Group. Given the fund aims to moderately beat the FTSE All-Share index, it is not expected to produce high levels of outperformance. However, the fund is competitively priced and has delivered relatively consistent outperformance over time.

Removal of Ninety One UK Alpha

Ninety One UK Alpha will be removed from the Super 60 rated list following the departure of the experienced manager Simon Brazier from the fund at the end of March 2023. Brazier’s experience and track record were key reasons why the fund was recommended for the Super 60. Going forwards, the fund will be managed by Anna Farmborough and Ben Needham, who moved from Threadneedle along with Brazier in 2014. The fund was placed under review upon the announcement of Brazier’s departure in February 2023 and the decision has now been taken to remove the fund. We will be looking to find a suitable replacement for the fund in due course.

Ninety One UK Alpha - Under Review

Simon Brazier is leaving Ninety One at the end of May and will step down from managing the UK Alpha strategy on the 31st March. We understand that going forward the UK Alpha and UK Equity Income strategies will be managed by Anna Farmborough (who is already co-fund manager on UK Alpha) and Ben Needham (who is the UK Equity Income manager). We will be meeting with the managers in due course to understand their plans for the funds. Therefore, whilst we assess the impact of these team changes, we are placing the Ninety One UK Alpha fund under formal review.

Removal of TM Crux European Special Situations

We recommend the removal of the TM Crux European Special Situations fund. The fund was initially placed Under Review by interactive investor in November 2021 following performance concerns. It was removed from ‘under review’ and reinstated in January 2022, with Morningstar, in partnership with ii’s in house investment experts, taking a view that short to medium-term performance could be overlooked in the context of the experience and approach of the team. But patience has now run out. Together with Morningstar, we still regard the team’s extensive knowledge and experience in analysing European companies positively, but now note some recent missteps. We have continued to monitor the fund closely and following the fund’s recent annual review, conviction has been tested. As such we no longer view the fund as one of our highest conviction ideas.

Removal of IFSL Marlborough Multi Cap Growth fund

We recommend the removal of the IFSL Marlborough Multi Cap Growth fund. A recent review of the fund raised questions regarding the process and also raised concerns with regard to team resourcing and collaboration. Specifically, given that this fund has substantial small-mid cap exposure, which requires a great degree of analysis and expertise, concerns were raised regarding the size and collaboration of the team. We do not therefore view the process and people elements of the fund as leading within the peer group and, as a result, we no longer view the fund as one of our highest conviction ideas.

Removal of Royal London UK Equity Income fund

Following the Annual Review of the Super 60 fund list we recommend the removal of the Royal London UK Equity Income fund. The long-term fund manager, Martin Cholwill, retired at the end of 2021, and although we did not feel this news warranted immediate concern, our ongoing assessment of the fund has concluded that there are stronger ideas in this category. The overall level of resource dedicated to the strategy is also viewed as a little light on a relative basis, particularly given the teams other responsibilities. As a result, we no longer view this fund as one of our highest conviction ideas.

Removal of Mobius Investment Trust fund

Following the Annual Review of the Super 60 fund list we recommend the removal of the Mobius Investment Trust fund, which has been a Super 60 constituent since late 2020. A recent review of the fund highlighted concerns around resource. There has been significant turnover within the team and a reduction in size and experience. This gives rise to Morningstar, in partnership with ii, no longer viewing the fund as a highest conviction idea.

Removal of iShares Environment Low Carbon Tilt Real Estate Index Fund (UK)

Following the Annual Review of the Super 60 fund list we recommend the removal of the iShares Environment Low Carbon Tilt Real Estate Index Fund. The fund has recently been re-named (formerly iShares Global Property Securities Equity Index Fund) and has seen a change in its investment objective.

Having previously tracked the FTSE EPRA/NAREIT Developed Index, the fund will now track the FTSE EPRA/NAREIT Green Low Carbon Target Index (an index commissioned by BlackRock), which completely changes the selection rationale. The fund will therefore have an environmental, social and governance (ESG) tilt through the index’s ESG screens and criteria. The change of benchmark has had a limited impact on index constituents at present, but this is expected to increase over time.

Inclusion of Janus Henderson European Selected Opportunities as Core European Equities option

Janus Henderson European Selected Opportunities has been added as a European Equities Core option on the Super 60 fund list. The fund is managed by John Bennett who is a very experienced manager and has managed European equities for more than two decades, including 17 years at GAM. The managers seek to outperform the FTSE World Europe ex UK Index through a combination of stockpicking and taking into account the wider macroeconomic backdrop to build a portfolio of high-quality European equities.

They pay close attention to global macro and sector trends as these provide valuable insights into the prospects of European companies and also look for contrarian trades. Bennett has added considerable value through stock selection over the years while also proving adept at steering the portfolio in line with his macroeconomic views.

Inclusion of Fidelity Special Values Ord as Adventurous UK Equities option

Fidelity Special Values investment trust has been added as an UK Equities Adventurous option on the Super 60 fund list. The trust is managed by Alex Wright who has been at the helm since 2012 and is an experienced manager with particular expertise in smaller companies. The trust’s process looks to identify unloved companies that have the potential to recover based on factors such as a business model/corporate change or industry cycles. The manager may buy into such situations at an early stage which tends to result in a contrarian value biases. The trust has a thorough and well-defined contrarian value approach, which leads us to have a positive view on the fund’s investment process.

We feel the fund is a strong option for investors seeking a contrarian and value orientated approach to investing across the market cap spectrum of the UK market.

Inclusion of Artemis Income as Core UK Equity Income option

Artemis Income fund has been added as a UK Equity Income Core option on the Super 60 fund list. The strategy aims to outperform the FTSE All Share benchmark over the long term, while providing a growing income and a dividend yield. Adrian Frost is an experienced investor and has managed the fund since January 2002. He is supported by Nick Shenton who joined the team in mid-2012. The pair also hired Andy Marsh as a third co-manager in February 2018.

The co-managers primarily hunt for companies with attractive free cash flow yields, with the goal of constructing a portfolio that generates cash flow in excess of the market. The team spend a significant amount of time appraising company management and believe that management's ability to allocate capital efficiently is crucial. The fund has delivered excellent relative returns over the long term. However, the strategy, in part because of its focus on cash flow, has a value bias compared

with the FTSE All Share Index. While this bias towards value has acted as a headwind in recent years, it is not more pronounced than that of the average UK Equity Income peer.

Reclassification of Man GLG Continental European Growth Fund

The Man GLG Continental European Growth fund currently features on the Super 60 list as a European Equities Core fund option. While we continue to believe the fund has merit for long-term investors, we believe the fund’s profile means that it is better suited to the Adventurous category. The manager typically invests in a concentrated portfolio of 25 to 30 stocks with the top 10 stocks representing in excess of 50% of fund assets. The portfolio pays little or no attention to benchmark allocations. While high conviction portfolios such as these have merit and often deliver excellent returns in the long term, short-term performance can be significantly more volatile than that of the benchmark and peers and as such we believe that the fund is better suited to the Adventurous category.

iShares Environment & Low Carbon Tilt Real Estate Index Fund (UK) – Under Review

Following BlackRock's recent announcement regarding changes to the iShares Global Property Securities Equity Index Fund (UK) Morningstar have taken the decision to place the fund Under Review. The benchmark index of the Fund has been changed to incorporate certain environmental, social and governance (“ESG”) related considerations and to change the name of the Fund. To reflect the change of the Fund’s benchmark index the name of the Fund has been formally changed to iShares Environment & Low Carbon Tilt Real Estate Index Fund (UK). Morningstar are currently reviewing the impact of these changes and whether the fund continues to remain suitable for the Super 60 fund list.

Inclusion of five new investments:

• Ninety One UK Alpha Fund as Core UK Equities option
• Jupiter UK Special Situations Fund as Adventurous UK Equities option
• Jupiter Japan Income Fund as Core Japanese Equities option
• PIMCO Global Investment Grade Credit Fund as Global Bonds Income option
• Blackrock Continental European Income Fund as European Equities Income option

Retention of Crux European Special Situations Fund

Recent performance has underwhelmed, which manager Richard Pease is not accustomed to. Indeed, this is the worst period of performance in Pease's career, and relative performance of the fund is now behind the index and the category average on a 1-year, 3-year and 5-year basis to the end of October 2021.

In 2020, poor relative performance resulted from a number of stock-specific disappointments, in addition to broader market dynamics related to COVID. Pease appears to have been wrong-footed by market dynamics following the outbreak of the pandemic.

Some of the holdings considered to have defensive qualities (such as recurring service revenues) were heavily impacted by COVID, and there were some stock-specific issues that hampered returns (e.g. Just Eat, and a slightly levered German property company - both improving now).

In addition, the strategy is not as exposed to hyper-growth and some deeper value segments of the market, which have driven index returns in 2021. The fund’s bias towards mid-cap companies with high return on capital has benefited investors well since inception but has meant that the portfolio is quiet heavily skewed with significant sector dispersion to the index.

Even more recently, the Chinese technology crackdown has been a drag on performance, and the fund's China holdings (Alibaba, held directly, and Tencent, which is held via Prosus) performed very poorly relative to the Europe ex UK market.

We think short to medium-term performance can be overlooked and believe that over the long run the market will likely reward companies with high ROCE, strong free cash flow generation, and low cyclicality. Pease and Milne have an extensive and strong track record in identifying such companies, and we are reassured by Pease's long-term track record, which remains above the benchmark.

Pease continues to execute as expected on this investment strategy that has served investors well over the long-term, and we would duly expect performance to pick up again. Therefore, we are removing the fund from Under Review.

Retention of Lindsell Train Japanese Equity Fund

The Lindsell Train Japanese Equity fund has to date been classified as a ‘Core’ fund however we believe the fund’s growth style bias and the concentrated nature of the portfolio lead to a return profile that is more volatile than one would expect from a fund with a Core profile. While the fund’s long-term returns have been strong, the duration and magnitude of out-and under performance are not in keeping with that of a Core mandate. To this end we believe that the fund is better suited to the Adventurous Investment Category.

Removal of Liontrust Special Situations Fund

We are removing Liontrust Special Situations fund from the II Super 60 list due to concerns over the strategy size. The fund is one of the largest UK Equity funds in the market but maintains a dedicated allocation to small and mid-cap companies. This means that the fund has to choose between having high ownership of a company or owning smaller portions of more companies. We feel that this means the managers cannot fully express the fund's investment process and that they may end up owning companies in which they have lower conviction just to spread the money. We recognise that the fund has performed well and still believe the process underlying the strategy is strong, but the fund is being removed given the uncertainty that surrounds the fund's liquidity profile.

Removal of CFP SDL UK Buffettology Fund

This strategy was previously Under Review due to concerns about the size of assets that were being accumulated and we have taken the decision to remove it from the Super 60 list. The fund has grown in size over the last 3 years based on strong inflows, and our analysis of the liquidity profile (how quickly the fund could be sold if everyone requested their money back) and ownership (how much of each company they own) suggests that if inflows continue then the strategy could either run into problems or have to change how the fund is run, for example investing in large companies when historically their success has come from smaller companies. We recognise that the strategy has delivered very strong performance but due to the possible risks or uncertainties we have lost confidence that this return profile can be replicated in the future.

Removal of JPMorgan European Income Trust

This strategy was previously Under Review due to the planned merger with the JPM European Growth Trust and is now being removed as it sat in the income bucket which will no longer be the Trust's primary aim. Whilst the merged vehicle will maintain a 4% dividend policy to appeal to income investors the primary objective of the Trust will no longer be the delivery of income and as such we are removing the Trust from the Super 60 list in order to replace it with a purer income seeking strategy.

Removal of FTF Martin Currie IF Japan Equity Trust

We are removing the FTF Martin Currie IF Japan Equity fund due to its increased level of risk. Whilst we acknowledge that the fund has delivered excellent long term returns, it has a very strong style bias and invests predominantly in small and mid-cap companies. This means that when markets are strong the fund does a good job of capturing upside but when the tide turns against it, the fund can suffer heavy losses. Consequently the fund's volatility has been much higher than peers and as such it is being removed.

Removal of Marlborough Global Bond Fund

We are removing the Marlborough Global Bond Fund due to the announcement that lead manager Geoff Hitchin will be retiring. Having a stable team and process is a key criteria for us when assessing funds qualitatively as it gives funds the best chance of consistently delivering good returns. As a result of the team change we feel that the fund is no longer a best in class option and are removing it.

Artemis Monthly Distribution

In line with our stated methodology, Artemis Monthly Distribution was put under formal review on 13 September 2021 following the announcement that its co-manager James Foster is planning to retire at the end of 2021. Foster, who had managed the bond element of the fund, has been replaced by Stephen Baines. Jacob de Tusch-Lec continues to manage the equities portion of the fund. There have been no changes to the fund’s objective or investment process. Given the continuity of the strategy and successful management transition, we continue to maintain our conviction in the fund. In our view, it is still one of the best options for income investors in the mixed asset sector.

CFP SDL UK Buffettology      

In line with our stated methodology, CFP SDL UK Buffettology fund has been put under formal review due to concerns around resource and size of assets. The fund is an adventurous option in our UK equities asset group. 

In regard to resource we have concerns over key person risk as Keith Ashworth-Lord is the sole manager of the fund, plus in June, he took on the responsibility of another fund - Free Spirit - following the departure of Andrew Vaughan. At present, there is no clear succession plan in place, as there is no named deputy manager on CFP SDL UK Buffettology fund. As part of our formal review process, we will assess key person risk. 

The increase in size of the fund is also a concern. When the fund was initially placed on Super 60, at launch of the rated list in January 2019, its assets were at around £600 million. Today, the assets have grown to over £1.7 billion and the average market capitalisation of the companies held in the fund has also grown. In our formal review we will investigate if the size of the fund hinders Ashworth-Lord from having meaningful exposure to small-cap and micro-cap shares, which were a prominent part of the fund when it was placed on Super 60. 

We will make a final decision in the upcoming annual review of the Super 60.

Crux European Special Situations

Crux European Special Situations has been put under formal review due to performance concerns. This is line with our stated methodology. The fund is an adventurous option in our European equities asset group.  

Over one, three and five years the fund has underperformed the MSCI Europe ex UK Index and the Investment Association Europe ex UK sector. 

In-line with our methodology, the review process will include analysis of the fund’s underperformance over the medium term. We will also consider various adventurous options available withing the Europe ex UK Equity sector if we decide to replace the fund on the Super 60 list. 

We will make a final decision in the upcoming annual review of the Super 60.

Inclusion of Wisdom Tree Enhanced Commodity ETF

• Wisdom Tree Enhanced Commodity ETF as Low Cost Specialist option

Scottish Mortgage

In-line with our methodology, the investment trust was put under formal review on the 19 March, following the announcement that its long-time lead manager James Anderson will retire next year. Since then, we have been in touch with the team at Baillie Gifford in order to establish whether there could be potential disruptions in the process or changes to the philosophy of the strategy. Our findings confirmed that there will be no changes to the process and philosophy and the new lead manager Tom Slater will continue seeking exciting opportunities with significant growth potential. The transition is well-planned as James will step down in April next year and resource issue was addressed through the appointment of Lawrence Burns as a deputy manager. As a result, we decided to remove the trust from under formal review and retain its Super 60 rating.

Inclusion of six new investments

• Vanguard FTSE All-World High Dividend Yield ETF as Low Cost Global Equity Income option
• iShares Global Property Securities Equity Index Fund as Low Cost Property option
• Diverse Income Trust as UK Equity Income Smaller Company option
• Legg Mason IF ClearBridge Global Infrastructure Income as an Alternative Core option
• Capital Gearing Trust as Mixed Assets Core option
• Fidelity Multi Asset Income Fund as Mixed Assets Income option

Removal of SPDR S&P Global Dividend Aristocrats ETF

Following our annual review, we decided to remove the SPDR S&P Global Dividend Aristocrats ETF from the Low Cost Global Equity Income category due to higher risks attached to this strategy. We have taken into account that the fund’s objective is focused on tracking high dividend-yielding companies that have increased or held their dividends for at least 10 years. But the market environment has resulted in higher volatility and larger than expected tracking error. In addition, our peer group analysis revealed there are more attractively priced core strategies with a similar mandate and therefore we felt it would be prudent to pursue opportunities for this category elsewhere. However, it may still be worth considering as a satellite option in a portfolio.

Removal of North American Income Trust

The North American Income Trust lost its place following an extended period of unsatisfactory performance. As part of our annual review we decided to remove North American Income Trust from our Super 60 rated list due to an extended period of unsatisfactory performance. Our in-depth analysis included peer group analysis, portfolio positioning, performance attribution and a risk review of the trust. In addition, we have been actively communicating with the fund’s management team to clarify the reasons why the strategy failed to deliver against its performance objectives. We also acknowledged the fact that the managers’ style has been out of favour for a while and the US as a region is not the typical hunting ground for income seekers. However, we did not find enough evidence of the managers’ decisions and stock picks adding value to the overall performance over the long term. Therefore, we felt it would be prudent to remove the fund from the Super 60 as we have lost our conviction in the trust as a best-in-class option.

Retention of JP Morgan European Income Trust (income shares)

In line with our stated methodology, the income shares of JP Morgan European Income Trust were put under formal review on 26 November 2020 due to performance concerns. Our formal review included analysis of the trust’s portfolio positioning and outlook as well as sector and peer group assessment. As the trust is an income rated option, we also paid attention to the sustainability of future dividend payments. We have been actively communicating with the manager on various aspects including management changes, which has resulted in additional focused resource. In addition, we have been assessing the investment process. The trust’s management team has been increasing their focus on capital growth, which allows for lower yielding stocks to be held. In turn, this gives more flexibility to the portfolio, which should provide additional resilience over the longer term. Following analysis of portfolio attribution, we found that during the Covid-19 crisis stock selection has helped to mitigate underperformance to some degree. In terms of sustainability of dividends, although the trust has seen a significant amount of dividend cuts within the portfolio recently, there have been no cuts to the interim dividend in the Covid-19 crisis to date and the managers are confident the trust is generating enough income to continue to pay dividends. Therefore, we decided to maintain our rating and remove the trust from under formal review.

JP Morgan European Income Trust (income shares)

We decided to put the income shares of JP Morgan European Income Trust under formal review due to an extended period of unsatisfactory performance. In-line with our methodology, the review process will include analysis of the trust’s portfolio positioning and outlook as well as sector and peer group assessment. We will also communicate with the fund managers and try to establish whether the problems are more down to the individual strategy or are more market-related in nature. In addition, as this is an income rated option, we will also pay attention on the sustainability of future dividend payments.

Balanced Commercial Property Ord

In line with our stated methodology, Balanced Commercial Property Ord was put under formal review on 22 July 2020 due to continued uncertainty around income payments and its persistently wide share price discount to net asset value. Our formal review included performance and risk analysis, portfolio positioning and robustness of the investment process. We have also been actively communicating with the manager on various additional aspects including the strength of the balance sheet, stability of the prospective yield and discount management.

The trust offers diversified exposure to UK property with a bias towards prime properties which would normally be seen as defensive and serve as a core holding. The trust maintains relatively high retail exposure and is underweight industrial exposure versus peers which has materially impacted the performance record over recent years. The retail sector has been undergoing structural changes and has been affected the most by Covid-19 lockdowns. As a result, the trust has fallen onto one of the widest discounts in the sector, currently close to 40% which potentially represents a significant margin of safety as the trust’s retail exposure is primarily in the most prime locations such as London and South East.

Following the market shock earlier this year, the trust continued its recovery and has significantly improved its short-term return profile, while long-term numbers remain strong. The manager has demonstrated willingness to re-introduce full dividend distributions when conditions improve and believe that the portfolio is well positioned to begin its recovery once the restrictions surrounding Covid-19 are lifted. With rent collections continuing to improve, the trust recently reintroduced dividends at 50% of the previous level before suspension in April. The current dividend yield of more than 4% is still attractive. Therefore, we decided to maintain our rating and remove the trust from under formal review.

Schroder Income

We removed the Schroder Income Fund from our Super 60 rated list due to an extended period of unsatisfactory performance. The decision was made in line with our stated methodology and after conducting an in-depth review of the fund’s portfolio, process, drivers for return and fund flows. We acknowledged that the strategy’s investment style has been out of favour, which further contributed to its poor return profile. However, we would have expected stronger stock selection over the short and long-term and better risk-adjusted returns over the long-term. In addition, there have been consistent outflows from the fund so far this year which led to a significant reduction in its size.

Utilico Emerging Markets Trust

In line with our stated methodology, Utilico Emerging Markets Investment Trust was put under formal review on 5 August 2020 due to performance concerns.

Our formal review included performance and risk analysis, portfolio positioning and robustness of the investment process. We have also been actively communicating with the manager on various additional aspects including the shape of the capital reserves, stability of the prospective yield and discount management. Our findings led us to the conclusion that the trust has clearly managed to provide capital protection features over the long term, while offering one of the most attractive yields in the sector. Following the market shock earlier this year, the trust continues its recovery and has significantly improved its short-term return profile, while long-term numbers remain strong. Last but not least, the managers were very open and transparent in discussing major performance detractors and their outlook for the trust has provided all the information we required to retain our conviction. Therefore, we decided to maintain our rating and remove the trust from under formal review.

Removal of Templeton Emerging Markets Smaller Companies

We removed the Templeton Emerging Markets Smaller Companies Fund from our Super 60 rated list due to unsatisfactory performance. The decision was made in line with our stated methodology and after conducting a formal detailed review of the fund and meeting the team. Our analysis, which included a review of the asset class and the whole sector as well as peer group assessment, showed that the fund has been struggling to deliver against its objective and the category average. Therefore, we believe the fund is no longer suitable to be an endorsed option.

Inclusion of Mobius Investment Trust

We added Mobius Investment Trust to our Super 60 rated list as an Emerging Markets Adventurous option. Following our stated methodology, we have conducted in-depth quantitative analysis on the trust and the sector and met the manager before making our final decision.

Although the strategy has a relatively short but successful performance profile, the managers have an exceptional long-term track record in delivering above-market returns previously leading a number of specialist emerging and frontier market mandates at Franklin Templeton. In addition to providing diversification benefits and great scope for growth through a well-defined process, the team has been very open and transparent on the company structure and how they closely align their interest with those of their investors, which further helped us to build strong conviction in the trust.

BlackRock Frontiers Investment Trust

The BlackRock Frontiers Investment Trust was included in the ii Super 60 list of rated funds as an Adventurous option within the Emerging Markets category. On 7 September 2020, the Investment Selection Committee removed the BlackRock Frontiers Trust from our Super 60 rated list. The decision was made in line with our stated methodology and after conducting a formal in-depth review of the trust, which included asset class, sector and peer group analysis as well as meeting the manager and the team. We acknowledge this area of the market has been struggling, but believe that due to an extended period of unsatisfactory performance the trust is no longer suitable to be an endorsed option for our customers.

Inclusion of Morgan Stanley Global Brands Equity Income fund

This is the first new addition since the launch of the Super 60. In-line with our stated methodology, we have conducted rigorous quantitative analysis on the fund and met the investment team before making our final decision. The fund, which is featured as the ‘Income’ option in the Global Equity Income category, showed exceptional qualities in terms of investment process, performance and capital protection, income generation, strength of the team, transparency, and value for money. All this helped us to build conviction in the fund during our due diligence process.

Removal of Artemis Global Income fund

This decision has been made in-line with our stated methodology and after conducting a formal in-depth review of the fund. That included sector and peer group analysis as well as meeting the manager and the team. The manager’s investment style has contributed to the fund’s comparatively disappointing performance against peers, but more recently this has also been compounded by some poor stock selection decisions.

Reclassification of Murray International

The decision to reclassify Murray International from Global Equity Income/ Income to Global Equity Income/ Adventurous is in-line with our stated methodology. We have conducted a careful review of the risks associated with the trust, including the style of the manager and portfolio positioning as well as assessment of the sector. In conclusion, we maintain our conviction in the manager and his process. The risk re-categorisation was needed due to the current, post sell-off market environment and the possibility of longer recovery periods for value investing .

Merian North American Equity fund

In line with our stated methodology, Merian North American Equity fund was put under formal review on 25 February 2020 following the announcement that Merian has been acquired by Jupiter and a co-manager of the fund will be leaving the business.

Interactive investor’s selection team has been closely monitoring the situation and speaking to Merian to gain a better understanding of what changes, if any, are likely to take place after the acquisition, that could impact the fund’s team structure, philosophy or process. The details confirmed with Merian are relatively high level, and we are comfortable that the key fund managers are well committed and incentivised which should encourage team stability and continuity of the investment process under Jupiter’s corporate umbrella. As a result, the fund is no longer under formal review, and it will remain on our Super 60 list.

LF Lindsell Train UK Equity fund

In line with our stated methodology, Lindsell Train UK Equity was put under formal review on 29 November 2019 after being downgraded by two independent external agencies. Given its highly concentrated nature, we wanted to reassure ourselves that there had been no deterioration in liquidity.

The interactive investor selection team conducted extensive analysis on the liquidity, capacity and concentration of Lindsell Train UK Equity, and spoke to the fund manager at length. The key outcome is that our investment selection committee is comfortable with the liquidity of the fund, it has been removed from being under formal review, and it will remain on our Super 60 list. The majority of the holdings are large, liquid companies with diversified revenue streams. In terms of capacity, there is plenty of room for further growth without compromising the mandate. The fund has always had a concentrated, high conviction approach but has a low turnover and long-term successful track record.