Merrill Lynch Investment Managers has had three of its US funds downgraded by Standard & Poor's Fund Services due to “lack of consistency in its management approach”.
The Mercury OST North American, Mercury Selected North American and Merrill Lynch American funds were all downgraded to AA from AAA ratings in the latest S&P review of the sector.
Merrill Lynch disputes S&P's reasoning. MLIM managing director Julian Ide says: “We would not agree that we have changed our valuation criteria. There are times in any portfolio where the time-horizon for assessing projected future returns can vary.”
Dresdner RCM received the most favourable review from S&P, with two of its US funds – the Dresdner global distributor and Dresdner North American Trust – being upgraded from AA status to AAA.
Despite a volatile year in US markets, the North American sector was up by 24.3 per cent over the 12 months to November. However, the average return on a US fund has dropped by around 20 per cent in the past three months after stockmarket falls before Christmas.
S&P European head of research James Tew says: “It is notable this year that only two funds achieved AAA-rated status. This reflects the extremely difficult challenge of providing consistently strong performance over each of the past three years, a period marked by substantial volatility in the technology sector.”