Why We Downgraded Calvert Equity Fund

Decreased confidence in Calvert Equity’s CEYRX conservative guardrails led to a Process Pillar downgrade to Average from Above Average in September 2026, lowering the fund’s Morningstar Medalist Rating to Neutral from Bronze.

The US large-cap equity universe is closely followed, information travels fast, and armies of analysts research these companies. To succeed, an investment process needs more than discipline and consistency. It requires the ability to continuously produce new insights and ideas, something the fund’s subadvisor Atlanta Capital has not demonstrated. The team takes a conservative approach to growth, with the goal of identifying high-quality, long-term compounders. They want companies with steady earnings growth, recurring revenue streams, positive free cash flow, low debt levels, and strong competitive moats.

The self-imposed 5% position cap further restricts the strategy’s ability to keep up with the benchmark and peers in what has become a more concentrated universe. Some stocks now make up more than 10% of the index, which means the strategy will underweight these names as long as the market concentration persists. The team’s goal of finding stable businesses that will compound over long periods has also excluded many of the names that have powered the index’s growth in recent years. For example, the team has no investments in semiconductor stocks despite the industry accounting for 31% of the benchmark as of July 2026. That excludes highly profitable super-compounders such as Nvidia NVDA and leaves the fund trailing its benchmark on profitability measures, including return on equity, return on assets, return on invested capital, and net profit margin.

Key Morningstar Metrics for Calvert Equity

Morningstar Medalist Rating: Neutral

Process Pillar: Average

People Pillar: Above Average

Parent Pillar: Average

Consistent Turnover

Restructuring at Jensen Quality Growth’s JENYX parent firm weakens confidence in the team’s ability to execute what remains a solid approach, lowering its People and Parent Pillar ratings to Average from Above Average and its Medalist Rating of its cheapest share class to Bronze from Silver. All other share classes and an exchange-traded fund version of the strategy are now rated Neutral.

After a prolonged performance slump and several years of severe outflows, the firm laid off more than a fourth of its staff, including three investment team members, cut employee pay, and restructured firm ownership, reducing the number of employee-owners to 12 from 24. Though the boutique remains employee-owned and still exhibits some characteristics of good stewardship, it is clearly stressed and retrenching, which led to the Parent Pillar downgrade.

Those changes also contributed to the People Pillar reevaluation. Two of the laid-off investors covered holdings in this portfolio and had been hired to deepen the team’s industry expertise and support future succession planning. The reductions came also about a year after former Chief Investment Officer Eric Schoenstein retired in March 2025, and former comanager Kevin Walkush abruptly departed in August 2025. Experienced hands remain, yet that is a lot of upheaval for one firm and team in a short time, and these changes could affect Jensen’s ability to hire and keep talent, as well as to execute its solid process.

Key Morningstar Metrics for Jensen Quality Growth

Morningstar Medalist Rating: Bronze

Process Pillar: Above Average

People Pillar: Average

Parent Pillar: Average

Strong Management

Fidelity Advisor China Region’s FIQFX management team has proved capable of executing this China-focused strategy, prompting a People rating upgrade to Above Average from Average. This resulted in a Medalist Rating upgrade to Bronze from Neutral.

Ivan Xie and Peifang Sun, who have 18 and 26 years of industry experience, respectively, run this fund. They lean on a group of 23 fundamental analysts covering the Greater China region. The Hong Kong-based managers have demonstrated robust stock-picking skills, effective collaboration, and an ability to leverage Fidelity’s deep analytical resources.

Key Morningstar Metrics for Fidelity Advisor China Region

Morningstar Medalist Rating: Bronze

Process Pillar: Average

People Pillar: Above Average

Parent Pillar: High

Resetting Expectations

Turnover within FMI Common Stock’s FMIUX team has weakened confidence in its execution, prompting downgrades of its People and Process Pillars to Average from Above Average. The fund’s Medalist Rating fell to Neutral from Bronze.

Patrick English stepped down as CIO and manager at the end of 2025, completing a transition to Jonathan Bloom. Bloom cut portfolio management committee membership to six from eight. Two experienced analysts left and were replaced by less-tenured analysts, and a veteran analyst moved to client service. Broader small-cap, large-cap, and international responsibilities strain the less-experienced team’s ability to execute its philosophy.

Key Morningstar Metrics for FMI Common Stock

Morningstar Medalist Rating: Neutral

Process Pillar: Average

People Pillar: Average

Parent Pillar: Above Average