Major First State funds downgraded by Morningstar

Major First State funds downgraded by Morningstar

The decision by First State Stewart to split into two separate businesses has prompted major research company Morningstar to downgrade four of its most high-profile funds.

The group’s £822m Asia Pacific and £8.1bn Asia Pacific Leaders funds run by Angus Tulloch have been donwgraded to Silver from Gold, as have Jonathan Asante’s £784m Global Emerging Martkets and £2.8bn Global Emerging Markets Leaders funds.

Morningstar said the split, which will see two separate businesses being run from Scotland and another in Hong Kong, would mean a “loss of investment resources supporting the Asia research effort”.

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The newly renamed Stewart Investors will be based in Edinburgh and will comprise the GEM, Worldwide and Sustainability fund ranges, as well as most Asia Pacific funds, including Asia Pacific Leaders.

The other team will work out of Hong Kong and will be rebranded FSS Asia and will manage mainly single-country mandates within Asia, as well as the Asia Equity Leaders, Asia Select, Far East Leaders and Greater China funds.

The Scottish Oriental Smaller Companies investment trust is on the FSS Asia side.

Morningstar added that while the funds had been downgraded, the new ratings still reflected its “high conviction” in the managers.