ii Super 60 investments

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.

Fidelity Multi-Asset Income Fund - Under Review

Further to the announcement of the retirement of fund manager Eugene Philalithis, we are putting the Fidelity Multi Asset Income fund Under Review. Philalithis will be replaced by Talib Sheikh who is a new hire and is not due to join Fidelity until November 2023. Sheikh has experience in the multi-asset space having worked at Jupiter Asset Management and J.P. Morgan Asset Management in the past and will assume lead manager duties for this fund in January 2024, supported by the existing team. In addition to the manager change, Fidelity has stated that a review of the strategy is to be conducted, including the overall philosophy, to ensure it can deliver on its objectives. We are therefore placing the fund Under Review while we investigate and evaluate the impact of these changes.

GAM Star Credit Opportunities Fund - Under Review

In light of the uncertainty surrounding the latest developments with regard to the future of GAM we are placing the GAM Star Credit Opportunities fund Under Review. The proposed sale of GAM to Liontrust has fallen throughand as a result the board of directors has been ousted, while a plan has emerged, championed by a group of activist investors, to restore GAM to profitability through cost-cutting and other measures. 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 so far, however we are taking a prudent approach in putting the fund Under Review and will revise this view as we gain more clarity on this evolving situation.

Murray International Trust - Under Review

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. Connaghan and Fitzpatrick became co-managers here in 2017 and 2019 respectively and the aim is for the investment process to remain unchanged. Despite this, we view the upcoming departure of Stout as a material loss. He has managed the trust since 2004 and in our view is key to the contrarian, value-based process and decision-making of the trust, which is managed in a different style to most other strategies offered by the group. Although we do not see significant change to the portfolio in the short term, with Stout remining in place until June 2024 and the trust having a low turnover style, we have placed the trust under review while we evaluate the change to the investment team.

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.