Forsyth-OBSR upgrade two Threadneedle American equity funds

Forsyth-OBSR upgraded the £845 million Threadneedle American Fund managed by Andy Holliman, and the £557 million Threadneedle American Select Fund managed by Cormac Weldon, from A to AA because of consistent and strong performance.

Forsyth Partners Limited commented: “This is very much a function of the consistent and strong performance from both funds and our confidence in the team behind them.”

Cormac Weldon, Head of North American Equities at Threadneedle, commented: “It’s very rewarding to receive this kind of recognition from Forsyth-OBSR for delivering the kind of returns our clients want.”

“Our investors should not be asked to suffer exceptionally high levels of volatility for marginally high levels of total return. An outperforming portfolio must be able to deliver exceptional returns without added due relative volatility or risk. Andy’s core blue chip diversified Threadneedle American Fund has delivered top quartile returns with a level of volatility well below the peer group average. As such, its risk-adjusted return - simply, total return divided by volatility - is top quartile against its peers.”

“My American Select is more concentrated and has delivered a higher total return during the last three years, but it is important to ascertain whether this enhanced return has been at the expense of volatility. Although more volatile than its peer group during the last three years, investors have been more than compensated for in terms of total return, as the risk adjusted figure is top quartile against its peers.”

Both American funds have consistently delivered top quartile performance above its peers in the IMA North American sector. They have also consistently outperformed the S& P 500 over all time periods – one, two and three years. Performance data source: Micropal, bid to bid, net income reinvested, to 31 May 2007.

Both American funds are run along different investment mandates, such that they possess differing characteristics and thus differing performance expectations:

The Threadneedle American Fund is a core blue chip diversified equity portfolio. Investors should expect this fund to deliver top quartile medium and long term total returns, with relatively low levels of volatility.

The Threadneedle American Select Fund is a more concentrated core equity portfolio. Investors should also expect top quartile medium and long term total returns. Being a more concentrated portfolio than the Threadneedle American Fund, the larger conviction holdings result in higher levels of volatility. However, investors should be compensated for such added volatility with higher levels of total returns.

There are eight fund managers in Threadneedle’s North American equity team, one of the largest entirely based in London. Each investment manager has research and fund management responsibilities and places significant emphasis on teamwork. Research is integrated and typically organised along sector lines so that each fund manager has primary responsibility for specified sectors and stocks.

The Threadneedle American Fund still has an AA Rating from Forsyth Partners in its offshore Ratings Service.