FUND MANAGEMENT CHANGES LEAD TO MERCER RATING REVIEWS
The Shenton Income Fund (SIF) from DBS Asset Management (DBSAM) has been assigned a three star rating by Mercer Investment Consulting. This is a downgrade from its previous five star rating. According to a recent Business Times article, DBSAM’s $1 billion SIF had a five star rating that was suspended in mid-2005 – after several members of the fixed income team led by former MD Lim Heong Chye, left.
The article also quoted Mercer as saying that its ratings, introduced in 2002, are “forward looking” and combined qualitative and quantitative assessment. It says qualitative evaluation receives by far the most attention. Funds with five-star ratings are believed to have the “highest future performance prospects” against their peers.
In response to our queries, DBSAM says that they have taken note of Mercer’s concerns with their credit resources in their fixed income team. The fund house adds that the SIF currently draws on the investment experience and expertise of a team of 6 fixed income portfolio managers, 5 of whom come from global and regional investment management firms. The team of fixed income portfolio managers have an average investment experience of more than 9 years. DBSAM adds that the current resources committed to managing SIF remain strong and they intend to continue strengthening the team.
We also asked whether the 12-month FD rate is an appropriate benchmark for the SIF. The fund house responded that the fund was established 17 years ago to be managed on an absolute return basis, and continues with that objective. The fund house says that the 12-month FD rate was, and remains, an appropriate benchmark. DBSAM adds that it will continue to stay focused on investors’ interest for good and consistent absolute returns from the SIF.
At Fundsupermart.com, we have the SIF as a recommended global bond fund. We will review the global bond funds on our platform in the second quarter of 2006. Click here for a recent interview we conducted with the new fixed income team at DBSAM.
Another fund which has its rating suspended by Mercer is the First State Bridge. This fund is a balanced fund with equities and bonds invested in Asian markets. The suspension follows the departure of the head of Asian fixed income, Ben Yuen, from First State on 28 February 2006. Yuen led the team that manages the fixed income portion of the First State Bridge. The fund house will search for a replacement. In the interim period, the fixed income portion will be under the direction of Terence Cheng. First State Investments (Singapore) say that Cheng is a key member of the Asian Fixed Income team.
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