Morningstar Announces Winners of 2010 UK Fund Awards

8 March 2010

2010—Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced the winners of the Morningstar UK Fund Awards. The awards recognise funds and fund groups that delivered the greatest outperformance, on a risk-adjusted basis, in 2009 and over the longer term.

“Discipline and a time-tested investment approach are the common themes among many of this year’s winners,” said Jackie Beard, director of fund research for Morningstar UK. “The quantitative element of the awards looks at outperformance for the preceding year, but the methodology also places significant importance on a fund’s success in limiting downside risk relative to peers over a three- and five-year period. In the current market, where much of the recent success has been on the back of a rally in lowerquality and higher-risk fare, meeting these criteria will have been no easy task.”

New in 2010, the awards also include the first Morningstar UK Equity Fund Manager of the Year award. This new award is the first qualitative award issued by Morningstar since the company’s launch of qualitative fund research in the UK in February 2009. The award draws upon the expert qualitative fund analysis of Morningstar’s UK fund research team.

The winners of the Morningstar UK Fund Awards 2010 are:

Morningstar UK Equity Fund Manager of the Year
Alastair Mundy – Investec UK Special Situations

Investec Asset Management Ltd

“Alastair Mundy is a true contrarian,” Beard continued. “He and his team trawl the universe for stocks that others gave up long ago as a lost cause—and when they find them, this is when he really comes into his own, and the analysis begins.

“Mundy has built his team from scratch and has created a strong and like-minded group with a common investment philosophy. This philosophy has helped Mundy and the team to produce steady, consistent outperformance over Mundy’s tenure, irrespective of market behaviour. “Fund performance in 2008 pays testament to this, where Mundy managed to protect investors’ capital better than most.

Athough he still lost more than 19%, he beat his average category peer by more than eight percentage points. Over one-, three-, and five-year periods, the fund ranks in its Morningstar category’s top decile. Even better, the fund doesn’t come at a high cost, with a TER approximately 11 basis points lower than the category median.”

The winners in the quantitative award categories are:

Fund House Awards:

Best Large Equity Fund House
Fidelity International Ltd

Well reputed for having a fund for all seasons, Fidelity’s equity fund lineup is not lacking, with more than 80 qualifying funds in the UK.
But it’s not just about how many, it’s about their performance, and both Fidelity’s analyst teams and fund managers are in good shape
and have been for the last few years. This award is testament to their success.

Best Large Fixed Interest Fund House
Schroder Investment Management Ltd

A reorganisation at the helm of the team gave fund managers more freedom to follow their own conviction, rather than a house view.
Winning this award recognises that a strong team has become stronger as a result of the changes. Schroder receives this award for
the second year in a row. Best Multi-Asset Fund House M&G Investments Not only do they have some excellent products on the fixed-income side, but their equity funds are equally compelling. In addition, Tom Dobell at M&G Recovery was short-listed for the Morningstar UK Equity Fund Manager of the Year award. M&G’s Global desk in particular is worthy of note and several of their funds carry either an Elite or Superior rating from Morningstar.

Best Specialist Equity Fund House
First State Investments Ltd

At First State, the firm’s products match their skill sets; that is, they don’t try to have a fund in every category. The group even took the unusual step of closing their UK desk some years back as they recognised they didn’t have an edge in the highly-competitive UK
space. In Asia and the emerging markets, however, they have a very clear edge and one of the strongest teams in the industry.

Best Specialist Fixed Interest
Fund House M&G Investments

There’s no doubt that the credit team at M&G is one of the bestresourced that we’ve come across. The call by the financials team to
cut banks very early on was highly beneficial to investors in M&G’s fixed-interest funds. They receive the Best Specialist Fixed Interest
House award for the second year in a row.

Fund Category Awards:
Best UK Large-Cap Equity Fund
Majedie Asset UK Equity A

Majedie only manages UK equities and they do it very well. Over the five–year period ending 31 Dec. 2009, Majedie Asset UK Equity A
returned an annualised 10.89%, more than double that achieved by the category. The fund is managed by four founding partners of the firm and this stability at the helm has without doubt been a benefit to their investors.

Best UK Mid-Cap/All-Cap
Equity Fund
JOHCM UK Growth GBP

Mark Costar was well positioned ahead of the rally in March last year, with holdings spread right across the cap range in keeping with his investment style. He has stuck to four basic principles throughout his investing career and it is this discipline that has helped him navigate the volatility in the markets.

Best UK Small-Cap Equity Fund
Investec UK Smaller Companies A Inc Net

Philip Rodrigs uses Investec’s 4Factor philosophy to run this fund and his savvy use of technicals in 2009 helped him understand the
momentum factor even more—generating returns of more than 70% last year. But the stellar 2009 record follows good performance the last two years at the fund, albeit with more muted returns, and shows adaptability to different market environments.

Best Europe ex-UK Large-Cap Equity Fund
MFS Meridian Continental Europe Eq A2 GBP

This fund is very much a team effort, with Matthew Barrett in the driver’s seat. In keeping with his fellow winners, he did a great job at
limiting losses in 2008, which positioned him well going into 2009. It’s a focused portfolio, with just 33 names at year-end, but this allows Barrett to show conviction in his picks—and it certainly worked well last year.

Best Europe Large-Cap Equity Fund
Franklin European Growth A Acc €

Co-managers Ed Lugo and Michael Clements have shown themselves to be highly adept at managing this fund together, at a house we hold in high regard. Last year was exceptional: they produced capital returns of nearly 50%, approximately 11 percentage points more than their Morningstar category average.

Best Global Large-Cap Equity Fund
Veritas Global Focus A GBP

Managed by Charles Richardson and Andrew Headley, Veritas uses a thematic approach for all their funds and last year saw the introduction of a new theme in the summer: Scarcity and Supply Constraints - an approach finds that although the credit crunch has created capacity in some areas, in others it is in short supply. This isn’t just about commodities, but is wider and reaches sectors such as healthcare and drug innovation where spending has been cut. This shows adaptability without deviating from their core principles and they have proven their success at using themes over the long term.

Best Asia Pacific Equity Fund
Veritas Asian A GBP

Not only did Ezra Sun produce excellent returns in 2009, but he also protected his investors’ capital well in 2008, a trait we like to see.
Sun’s success last year came in part from recognising a return in strength for the U.S. dollar, despite consensus on its weakening. His
conviction in macro themes made for a good final quarter to the year.

Best US Large-Cap Equity Fund
CIF US Growth and Income B

Managed by Capital International, a group we think highly of in the United States, this fund just beat last year’s winner, Jupiter North
American Income, to take first position and win the award. They run a fairly tight portfolio and have no problem showing conviction in their top picks, which played out well last year.

Best Emerging Markets Equity Fund
Aberdeen Emerging Markets A

Managed by Devan Kaloo and his team, the Aberdeen process used across all their equity funds favours high-quality value stocks.
Ordinarily, a year like 2009—where momentum played a big part— wouldn’t be their market. But the process led them heavily into
consumer and financials stocks, providing the needed boost to propel the fund to more than a 60% return by year-end.

Best Sterling Corporate Bond Fund
M&G Strategic Corporate Bond A Acc

Although this fund has “strategic” in the name, it does not follow other strategic funds in behaviour and is primarily an investment-grade bond fund. Richard Woolnough’s top-down views combine well with the bottom-up analysis conducted by the credit team. In 2009, he waited until mid-year to add risk into the fund and this certainly paid off. By year-end he returned more than 22% to his investors—returns that are normally saved for the equity-fund world.

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