Fund manager fixed income fees colour upgrades, downgrades

Mike Taylor

Managing Editor and Publisher

1 May 2023

Expensive fees have seen a number of funds downgraded as part of the latest Morningstar Fixed Income Sector Wrap.

The research wrap, looked at 72 fixed income strategies with Morningstar declaring that three strategies achieved a rating upgrade owing to either Morningstar’s increased conviction in the investment team, research capability and investment processes or stronger assessment under our enhanced rating system because of lower fees.

However, the research and ratings house said it downgraded four strategies “owing to reduced confidence in the investment team, diminished conviction in the investment processes or lower assessment under our enhanced ratings system because of expensive fees”.

The products to receive an upgrade under the Morningstar review were:

iShares Core Composite Bond ETF

Vanguard Australian FixedIncome ETF

Payden Global Income Opportunities

In the case of the iShares and Vanguard ETFs, Morningstar noted cheap fees, while in the case of the Payden product it noted the tenure and stability of the investment team.

The products to be downgraded by Morningstar were:

AB Dynamic Global Fixed Income

Pimco ESG Global Bond Fund – Wholesale

PIMCO Global Credit W

Vanguard Diversified Bond Index