One fund has dropped out of Morningstar's Medal rankings, another has swapped its Silver for a Bronze and a third is under review.

From the BT Financial Group stable – whose fund management operations were last year rebranded as Pendal Group – the BT Asian Share Retail (217) and Pendal Asian Share (4246) strategy has been pared back to a Bronze medal, from its previous Silver ranking.

This is primarily because of concerns around the fund's "stretched" team, which operates under Singapore-based portfolio manager Samir Mehta. Morningstar manager research analyst Ksenia Zaychuk says the absence of an analyst raises questions about the strategy's research rigour and workload.

These concerns are reflected in the fund's performance. It had a "dismal 2017-28", returning negative-12.44 per cent.

"It bounced back in 2019 through August, gaining 16.5 per cent, but most of this outperformance is due to a single company, Chinese sports apparel company Li Ning, whose share price has gained more than 170 per cent year-to-date," Zaychuk notes.

Since losing his in-house analyst, Mehta has been using external research while hunting for a replacement – no easy task in a market where demand for bilingual investment experts far outstrips supply.

And by Mehta's own admission, external research is becoming increasingly "juniorised" – of lower quality and prepared by analysts who in many cases have never experienced a protracted market downturn.

Zaychuk believes that less rigorous fundamental research – such as determining whether a security is correctly valued in line with the market and revenue, earnings and profit margins – exposes the portfolio to more stock-specific risk. This risk is particularly high in the cyclicals sector, where Mehta adds his own shorter-term picks.

AMP Capital lags in people and technology

AMP Capital Multi-Asset A (19207) has dropped out of the medals altogether, moving to a Neutral rating from Bronze.

The fund remains a reasonable option for investors, says Morningstar senior fund analyst Simon Scott, but he says the downgrade reflects his decreased confidence in AMP's market solutions team, which provides portfolio manager Matt Hopkins with research.

"It’s here that we don’t find above average insights into the strategy’s underlying holdings.

"Peers have rapidly ramped up their capabilities in human and technological resources; although AMP is also improving, it has lagged in this regard," says Scott.

"In our view, the AMP multi-asset business requires a greater competitive edge across the team and investment process to keep pace with our other Morningstar Medallists."

Dimensional under review as it scraps country cap 

Within the emerging markets funds space, Dimensional Emerging Markets Trust (6468) has had its Bronze rating placed under review, subject to a decision by Morningstar's ratings committee.

The review has been prompted by the manager flagging the removal of its 17.5 per cent cap on Chinese stocks.

Morningstar manager research analyst Michael Malseed says the firm's decision to remove this cap is aimed at reducing the portfolio turnover and transaction costs generated by this "regular pruning".

The fund had for several years been bumping up against this cap, which according to Malseed, helped promote diversification.

Following the change, which Dimensional plans to roll out over the next several months, the fund's country composition will more closely resemble the MSCI Emerging Markets Index, when the change is finalised at some point in the second-quarter of 2020.

The Morgan Stanley Capital International index is used to measure equity market performance in global emerging economies. It respresents the performance of the large- and mid-cap stocks across 24 countries.

"This is a significant change to Dimensional’s emerging-markets strategies, so the related funds are under review," Malseed says.