RPT-Fitch publishes Petercam Equities World 3F's 'strong' fund quality rating
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Oct 28 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has published Petercam Equities World 3F's, a fund managed by Petercam Institutional Asset Management (Petercam IAM), 'Strong' Fund Quality Rating.
The 'Strong' rating reflects the fund's disciplined investment approach, which is supported by systematic screening, in-depth fundamental research and well-defined portfolio construction. Its growth forecast-based allocation approach allows the fund to capture expected emerging market growth, a key differentiating factor from other equity funds, in Fitch's view.
KEY RATING DRIVERS
Petercam Equities World 3F is a UCITS IV-compliant Belgium SICAV with EUR285m of assets as of end-September 2013, investing in large cap global equities. The investment objective is to outperform the MSCI World index on a three-year rolling period, with lower volatility than traditional global equity funds.
The fund's active, long-only investment strategy is primarily driven by fundamental bottom-up stock picking, covering global equities, complemented by top-down structural investment themes. The fund targets large cap quality growth companies that will be future market leaders. Geographical allocation is managed according to the IMF GDP forecast for the next 10 years, as opposed to the more typical market cap-weighted approach, and focusing more on companies' sales location rather than on their domicile. All investments in the fund's portfolio are equally-weighted, with a maximum of 50 stocks held.
The fund manager and his back-up are responsible for investment decisions. They benefit from the input and oversight of the fund's advisory board consisting of Petercam's senior investment professionals. Stock research on European companies is conducted by a dedicated equity research team of nine, the remainder being covered by fund managers and the global thematic equity team. An independent investment risk team of six oversees and challenges portfolio managers' decisions, making full use of third-party risk analytics. Petercam IAM has outsourced its middle office and IT functions to Lombard Odier since 2012.
The fund has been managed with the current strategy since 2008. It achieved Lipper Leader scores of three and five over three and five years to end-September 2013, respectively. It delivered a Sharpe risk/return ratio (measuring risk-adjusted performance) of 0.83 and a total return of 30% in the three years to September 2013. It is, however, lagging behind the MSCI World Index over that period, as its bias towards emerging market economies has led to the fund being affected by the recent underperformance of emerging market equities.
Petercam IAM is wholly owned by Petercam SA, which was founded in 1968 and 70% of the equity is owned by 13 partners. It had EUR13.6bn assets under management (AUM) as at June 2013, 45% invested in equities. The company's historical focus has been on European assets, until it initiated global and thematic investment strategies in the mid-2000s.
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 of the rating. For example, this may be manifested in significant structural deterioration in the fund's performance or departure of key investment professionals.
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, please see www.fundmanagement.fitchratings.com
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Link to Fitch Ratings' Report: Petercam Equities World 3F
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