OREANDA-NEWS. June 15, 2015. Fitch Ratings has affirmed Sycomore Selection Responsable's (SSR) 'Good' Fund Quality Rating. The fund is France-domiciled and managed by Sycomore Asset Management (Sycomore AM, rated 'High Standards').

KEY RATING DRIVERS
The affirmation reflects Fitch's opinion that the fund's ability to deliver on its mandate has not been affected by the recent departure of the fund's lead portfolio manager (PM). Cyril Charlot, a founding partner of the company and co-PM on the fund since its inception, still manages the fund. A newly-hired socially responsible investing (SRI) specialist will co-manage the fund with him. Two SRI analysts continue to support the two PMs. This ensures continuity of research and investment approach, in Fitch's view.

Fund Presentation
Launched in January 2011, SSR is a long-only eurozone equity fund with EUR161m of assets at end-May 2015. It invests in companies of all market capitalisations, under an SRI approach.

Investment Process
The fund's investment process combines Sycomore AM's highly-disciplined, fundamental stock-picking approach, in place since the company's inception in 2001, with use of proprietary environment, social and governance (ESG) filters. The combination allows the fund to exclude stocks vulnerable to ESG risks and to select those well positioned to seize opportunities related to sustainable development. A distinctive feature is the depth of this SRI research, primarily based on management meetings and internal analysis. This process contributes to the stock selection decisions that drive the fund's market exposure and sector allocation. The fund has no specific sector or benchmark constraints.

Resources
Lea Dunand Chatellet, who joined Sycomore AM in 2010 as an SRI analyst and had managed the fund since its inception in January 2011, left the company in early May. A new analyst/PM coming from Financiere de l'Echiquier, with five years of experience of SRI, has recently joined to head SRI research and co-manage the fund with Cyril Charlot. They are assisted by a SRI analyst and a junior entry-level analyst who joined the team in 2014, to help maintain the database and indicators. Fitch considers this build-up and strengthening of the team over time as positive, contributing to ensure continuity of the research and philosophy despite the previous PM's departure.

Track Record
Since inception to end May 2015, the fund has stood in the first quintile of its Lipper peer group, with a cumulative performance of +62.3% (R share), and beats its benchmark by 16%. The fund is in the second quintile over one year and third quintile over three years, and is less volatile than peers. SRI views on companies tend to lead to significant sector biases which have remained relatively stable since the fund's inception. They contributed strongly to the fund's performance in 2012 in 2014 but proved detrimental in 2013.

Fund Manager
Founded in 2001, Sycomore AM is an independent asset management company, 87% owned by its four founding partners and employees. At end-May 2015, Sycomore AM had EUR2.9bn of assets under management, of which 66% were in eurozone long-only equity portfolios.

RATING SENSITIVITIES
The rating may be sensitive to material changes in the investment or operational processes, or resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could result in a downgrade. Fitch will monitor the stability of the fund in terms of adherence to its core investment and research process; as well as its ability to maintain its long-term performance track record in line with objectives. Notably, Fitch will monitor Sycomore AM's ability to successfully pursue its SRI investment management, following recent team changes. Sufficient demonstration of the above, complemented by a longer, robust track record would result in an upgrade. Conversely, an inability to demonstrate the above could lead Fitch to consider downgrading the fund.

Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure.

For more information, see www.fundmanagement.fitchratings.com