By continuing to use this site you consent to the use of cookies on your device. Find out more about our cookie policy and the types of cookies we use by clicking here.

First Eagle Amundi International AE-C

Analyst Report
Morningstar's Take
|14/07/2016

by San Lie
*  This rating and report were issued for a different share class of this fund. The performance and fee structure of this class may vary from that referenced.
Despite regulatory issues and ownership changes at First Eagle, the firm subadvising this fund’s management, we still think this fund remains a worthy holding.

First Eagle is to pay nearly USD 40 million to settle charges the firm improperly used mutual fund assets to pay for the marketing and distribution of fund shares. Also, the firm is slated to be acquired by two private equity firms, which means the founding family will for the first time be a minority owner of the firm. While this hasn't so far impacted the submanagement agreement with Amundi, First Eagle’s corporate culture is at risk, in our opinion. 

However, this fund’s investment merits remain intact. Veteran manager Abhay Deshpande--the team’s strongest link to its past under longtime skipper Jean-Marie Eveillard--left in October 2014, but the current team is deep and experienced. Managers Matt McLennan and Kimball Brooker Jr. have worked on the team for roughly seven years, and a 17-person analyst team supports them. That team has seen some turnover, but eight of 17 analysts have served here since at least 2009. Further, the team has maintained the long-standing disciplined, valuation-conscious strategy it has employed with great success for decades. The managers focus on companies with sturdy balance sheets selling at a discount to their estimate of intrinsic value, let cash build when opportunities are scarce, and typically own modest stakes in bonds and gold bullion. The team also delivered over a span in which stocks have largely thrived. Since Eveillard stepped down end of March 2009, the fund has beaten its category average with less risk but lagged its all-equity benchmark. But due to its resilience in downturns, the fund’s risk-adjusted returns sail past both its typical peer and the index. However, we regret Amundi keeps an unreasonable price to access this fund. The performance fee was improved in 2011 but it is still far from perfect with Libor + 400 basis points used as a benchmark. Still, the proven process and consistent results from the current team make this fund a good choice. It retains our Bronze rating.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleThe fund can be used as a core portfolio holding for exposure to global stocks.
Morningstar Pillars
PeoplePositive
This fund’s longest-tenured manager has left.
ParentNegative
We think Amundi does not sufficiently align its interests with those of investors.
ProcessPositive
The cautious strategy aims to preserve capital.
PerformancePositive
Solid in the long term.
PriceNegative
The fund remains very expensive: the performance fee has been improved but it is still imperfect.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
Permissions/Reprints   E-mail Morningstar   AddThis Social Bookmark Button