Fitch Affirms Petercam Equities World Sustainable Fund's 'Strong' Fund Quality Rating
Fitch had placed the fund's rating 'Under Review' following the departure of the fund's lead portfolio manager (PM) in December 2015. Today's affirmation follows Fitch's assessment of the good quality of the investment team of two new PMs, and PEWS's continued adherence to the fund's investment style, which is reflected in a healthy long-term track record.
The 'Strong' rating reflects PEWS's active, long-term investment approach, which is primarily based on bottom-up fundamentals selection. The investment approach also incorporates top-down thematic views and the SRI-ESG (socially responsible investment - environment social and governance) criteria for the relevant fund. Overall, the fund benefits from strong, staffing and IT resources, which remain broadly unaffected by the merger between the two asset management companies of Banque Degroof and Petercam SA in January 2016.
KEY RATING DRIVERS
FUND PROFILE
PEWS is a UCITS IV-compliant Belgium SICAV with EUR280.1m of assets as of end-June 2016, investing in 50 equally weighted large-cap global companies. The fund has an emerging markets (EM), quality growth bias. The fund has exposure to the financial sector, which was excluded until July 2016.
INVESTMENT PROCESS
PEWS invests in companies that it views as potential market leaders and comply with Degroof Petercam's sustainability criteria. Geographical allocation is based on the Oxford Economics' 2025 GDP forecasts and focuses on companies' sales location rather than on their domicile.
RESOURCES
The fund is managed by two seasoned PMs, who are part of Degroof Petercam's international equity team of three. They are A. Roose, who was PM and a member of Petercam's international equity team, and D. Dury, previously PM at Degroof.
The PMs benefit from the wider resources of Degroof Petercam, which include a European equity team of eight; a (Europe-focused) equity research team of 11 analysts; and a dedicated ESG/SRI strategist. An independent investment risk team of six oversees and challenges PMs' decisions, making full use of third-party risk analytics.
TRACK RECORD
The fund, which has been managed with the current strategy since 2008, has been an average performer in its global equity category. EM focus and the exclusion of the financial sector as well as a large cap quality growth bias, mostly explain the performance deviation from peers and the indicative benchmark (MSCI World), including the outperformance observed in 2016 to date.
FUND MANAGER
Degroof Petercam Asset Management is a newly formed entity originating from the merger of Degroof Fund Management Company and Petercam Institutional Asset Management. At end-June the combined entity had EUR34.3bn assets under management.
RATING SENSITIVITIES
The rating may be sensitive to material changes in the investment or operational processes or market risk profile of the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could cause Fitch to downgrade the ratings. For example, notable structural deterioration in the fund's performance or further departures of key investment professionals may cause the rating to be placed "Under Review" or downgraded. Fitch sees little potential for an upgrade, given the fund's niche.
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