4 New Funds on Our Radar

Morningstar Manager Research’s latest list of overlooked or emerging fund managers and strategies includes offerings from three industry stalwarts.

Here’s a look at four of the 11 strategies the team added to the July 2024 Morningstar Prospects list.

Artisan International Explorer ARHBX

This international small-cap strategy launched in November 2020 (via a separate account), shortly after managers Beini Zhou and Anand Vasagiri joined Artisan Partners; the mutual fund later launched in May 2022. Zhou and Vasagiri are boomerang Artisan employees who previously worked as analysts under David Samra on foreign large-cap offering Artisan International Value APHKX, which has a Morningstar Medalist Rating of Gold, before leaving for portfolio management opportunities elsewhere. Zhou worked for Matthews Asia from 2013 to 2020, successfully managing a few non-US small-cap mandates; Vasagiri was a portfolio manager at Paradice Investment Management from 2010 until 2019. The managers sit within Samra’s international value group at Artisan, though they operate independently. Like the broader team, Zhou and Vasagiri seek stocks trading at big discounts to their intrinsic value estimates but also emphasize quality firms with financial strength and shareholder-oriented management. That has resulted in a portfolio landing in the core section of the Morningstar Style Box. The strategy is concentrated, typically owning between 20 and 40 stocks, with position sizes sometimes approaching 10% of assets. Like most Artisan offerings, fees rank among the most expensive in the peer group.

T. Rowe Price Global Multi-Sector Bond Fund PGMSX

T. Rowe Price Global Multi-Sector Bond Fund’s team employs a unique approach and boasts an enviable track record.

The fund’s manager duo averages 15 years of industry experience and brings strong foreign-currency market experience. Lead manager Kenneth Orchard, who has been with the firm for 13 years, took over this strategy in 2018. In mid-2019, the team hired an external associate manager with 10 years of industry experience to support Orchard. The team draws on T. Rowe Price’s fixed-income sector managers, credit analysts, traders, quantitative analysts, and economists. While Orchard is the sole named manager, his team includes five sector portfolio managers specializing in asset-backed securities, mortgage-backed securities (both commercial and residential), global investment-grade, global high-yield and loans, and emerging-markets corporate sectors.

A well-structured and well-executed process considers both top-down and bottom-up research for security selection, sector allocation, and duration management. Daily interactions between managers and analysts focus on portfolio characteristics and risk assessment. While Orchard guides positioning, sizing, and macro views, sector managers handle sector allocation and security selection. The portfolio takes on more credit risk than typical peers, with a maximum of 65% in below-investment-grade debt. Its 27.3% of the assets (as of June 2024) in non-investment-grade debt is more than its global bond-USD hedged Morningstar Category peer median, giving it a yield advantage. The sector strategy advisor group plays a pivotal role in assessing credit risk and making strategic decisions.

Performance stands out since Orchard took the reins. Over Orchard’s tenure since February 2018, the fund’s I shares’ 2.4% return through June 2024 ranks in its category’s top decile and beat the Bloomberg Global Aggregate Index’s 1.5%. On a risk-adjusted basis (as measured by Sharpe ratio), the fund landed in the top decile during the same period.

Voya Target Retirement Funds/Trusts (one glide path: VTRKX)

Voya Target Retirement series combines high-quality third-party exchange-traded funds with the firm’s own actively managed funds to produce cost-effective blended portfolios.

The series’ taps well-regarded index ETFs from providers such as iShares and Vanguard, as well as active funds managed by Voya and its subadvisors. For example, Silver-rated Nuveen S&P 500 Index TISPX anchors the equity sleeve, while Silver-rated Voya Intermediate Bond IIBZ and Gold-rated iShares Core US Aggregate Bond AGG make up the bulk of the series’ fixed-income allocation. As of June 2024, 87% of the series’ assets sits in funds that earn Morningstar Medalist Ratings of Silver or higher. At 25 basis points, its price is attractive compared with Voya’s Solution series, which costs more than twice that amount.

The Target Retirement series is one of four target-date offerings overseen by the firm’s multi-asset strategies and solutions team, all of which share the same glide path and allocation process. At 95% equity, the glide path is more aggressive than peers in…