M&G fund downgraded as Somel ‘yet to prove himself’

Morningstar has downgraded its rating on the M&G Global Basics fund from ‘silver’ to ‘neutral’ after Randeep Somel replaced Graham French as manager.

The ratings agency has had the fund’s rating under review since Mr French retired and handed over the reins to Mr Somel in November.

It has now decided to downgrade the fund, primarily due to Mr Somel’s inexperience in being lead manager.

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Richard Whitehall, an analyst at Morningstar, said: “Randeep Somel has a very good understanding of the stocks in the fund, but he has yet to prove himself as a portfolio manager.”

He added: “Mr Somel’s fund management experience is limited to six months as manager of M&G Managed Growth and 12 months as co-manager prior to that.”

Mr Somel joined M&G’s global equities team in 2005 then became a dedicated analyst for the Global Basics fund in 2008, before taking on the deputy manager role in 2010.

The fund had gone through a period of underperformance before Mr French left, dropping into the bottom quartile of the IMA Global sector across one and three years as its exposure to mining and energy stocks dragged on performance.

Before he left, Mr French had started to adjust the portfolio’s focus and Mr Somel has continued that process, adding Microsoft into the fund soon after he took over.

But Mr Whitehall said Mr Somel had “yet to show where the fund will move under his management and also how he will cope with the demands of fund management” so therefore the fund deserved a ‘neutral’ rating for now.

A spokesperson for M&G said Mr Somel had been “immersed in the M&G Global Basics investment philosophy” and “intimately” knew all the companies in the portfolio.