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May 7 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Parvest Equity Best Selection Europe, a funds managed by BNP Paribas Investment Partners (BNPP IP) a ‘Strong’ Fund Quality Rating.
The ‘Strong’ rating reflects the fund’s highly documented investment approach, which is supported by in-depth research and portfolio management resources and demonstrated in a solid track record. In Fitch’s view, the depth of research, the industry focus, the peer decision making process and risk discipline differentiate the fund from its peers.
Parvest Equity Best Selection Europe is a sub-fund of the Parvest Luxembourg SICAV. Launched in May 2004, it is a long only European equities fund of EUR2.2bn as at April 2014.
The active, long-term investment approach with a three- to five-year holding period is based on bottom-up fundamental stock-picking. The fund is fully invested, and has a quality mid- to large-cap growth bias but no sector bias. BNP Paribas IP’s (BNPP IP) proprietary research differentiates itself from peers by its industry focus, depth of analysis and degree of formalisation. Analysts’ recommendations are challenged through a peer-review process
Investment decisions are subsequently taken in a collegiate manner by the whole European equity team. Risk budgeting drives portfolio construction.
Stock-specific factors and active shares are maintained at above 50% and 70% respectively. Each source of common risk factors is capped at 10%.
The stable European equity team consists of 10 PMs/ analysts, who have 20 years’ experience on average. In addition to BNPP IP’s deep shared risk management resource, the team benefits from a dedicated risk manager, making full use of equity third-party risk analytics.
The fund has demonstrated a long-term, strong, consistent risk adjusted performance, outperforming its category and benchmark (MSCI Europe) by 19.7% and 2.9% respectively over five years. In 2013 and year-to-date, the fund suffered from its growth quality bias, as value stocks outperformed.
BNPP IP (rated ‘Highest Standards’ by Fitch) is the asset management arm of BNP Paribas banking group (A+/Stable/F1). BNPPIP had EUR10.6bn of European equities under management as at end March 2014.
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. Fitch sees limited key person dependency in the team, so the departure of a PM is unlikely to affect the rating. Conversely, an upgrade could result from the demonstration that the fund is able to outperform its peers in a sustained period of detrimental market regime, characterised by the outperformance of low quality, value stocks. 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.
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Link to Fitch Ratings’ Report: Parvest Equity Best Selection Europe