Morningstar's latest reseach reveals which fund companies have the highest-rated funds, and which have the strongest ESG offerings
Fundsmith retains its top fund manager in Europe position, according to new research from Morningstar. In the latest iteration of Morningstar's annual Fund Family 100 report, a comparison of the largest fund families in Europe, our analysts rank the top companies for various categories, including the most highly-rated funds, the highest sustainability rating, and manager tenure.
The list uses assets under management of the fund companies' open-ended funds and exchange-traded funds (ETFs) for sale across the continent to determine the biggest 100. Analysts then evaluated them on a range of criteria, including the metrics already used to determining Morningstar's Medalist Ratings.
The report then highlights the top fund house within the biggest five, the one with the most Morningstar Medalist share classes, top-ranking firms for manager tenure, and best sustainability ratings.
This is the first iteration of the Fund Family 100 report using the Morningstar Medalist Rating, which we introduced in May this year to unify the Analyst and Quant rated funds.
Companies with the Highest Rated Funds
Fundsmith retains top spot for top-ranking firms for Medalist shares. According to Thomas De fauw, manager research analyst at Morningstar and author of the report, the fund house is as an example of an investment boutique that is well-placed for investment excellence.
Additionally, the group has just two strategies which follow the same investment philosophy and process, and key personnel are heavily invested in the funds they run, making them well-aligned with investors' interests.
Next, the list names Storebrand Fonder, Vanguard, Ruffer and FSSA Investments to complete the top five under this metric.
Among the 20 firms with the highest percentage of Morningstar Medalist share classes, 13 receive a Parent Pillar rating of Above Average or High, according to Morningstar’s Medalist Rating. The maximum rating of High has been awarded to Vanguard, T. Rowe Price, Wellington Management, Dimensional, MFS, and Degroof Petercam.
The Biggest Fund Houses
Within the five largest fund families, BlackRock is the biggest, whereby iShares still has the most assets under management. Together, the group manages over €1.2 trillion (£1 trillion) and earns an Above Average Parent rating.
Next is UBS, which following the acquisition of Credit Suisse in March 2023 surpassed its French rival Amundi, now third by size. Amundi has 47% of its assets in passive strategies, owing to the takeover of Lyxor in 2022. Vanguard completes the top five and also ranks favourably in terms of average fee levels alongside large ETF providers like iShares.
Best Sustainability Offerings
ASR tops the ranking for firms with the highest percentage of funds with 4 and 5 aGlobes, as measured by the Morningstar Sustainability Rating, or "Globe Rating". This ranking is a quantitative measure analysing the portfolio of a fund relative to its peer group, meaning the funds earning 5 Globes rank in the top 10% of their group, and funds earning 4 Globes rank in the next 22.5% of the distribution.
In the top 20 for sustainability ratings there are five positively-rated parents: Comgest, Ruffer, Storebrand Fonder, Thesis, and Kempen. Also in the list is BNP Paribas, which earns an ESG Commitment Level of Advanced.
When looking at the top firms by percentage of EU SFDR Article 8 or 9 funds, there are three asset managers that receive an ESG Commitment Level of Advanced (AllianceBernstein and Wellington Management) or Leader (Robeco). That said, it is Storebrand Fonder and Länsförsäkringar that are joint top at 100%, with Robeco in third.
Top Firms for Manager Tenure
Finally, MFS leads the list for portfolio manager tenure, a measure of management team stability. When coupled with a high level of transparency (defined by disclosure rates of funds' management teams above 95%), MFS, earns an analyst-driven Parent Pillar rating of High (upgraded from Above Average in June 2023).
DNB, Storebrand Fonder, Swisscanto, Ninety One, Comgest, Neuberger Berman, and Artemis also score highly for stability, and strong disclosure levels.
De fauw comments: "it's positive to see that, among the firms with the highest percentage of Morningstar Medalist share classes, many receive a Parent Pillar rating of Above Average or High. We hope reports such as this help asset managers continue to strive for excellence in their practice, strategy, philosophy, and process.
"ESG investing remains top of mind for many European fund houses. Among the top 100 fund families, the average share of Article 8 or 9 funds in the product offering rose to around 45% from 38% a year ago."
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