Own AMP (ASX:AMP) shares? Here’s why this expert downgraded some of its funds

AMP has reportedly been dealt another blow.

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Key points

  • A research house reportedly downgraded some of AMP’s North-branded investment funds late last year
  • An analyst is said to have noted “corporate uncertainty”, “cultural issues”, and “regulatory scrutiny” as key reasons for the downgrade
  • The AMP share price has fallen almost 5% year to date

Owners of embattled AMP Ltd (ASX: AMP) shares likely already know of its troubles.

After all, the AMP share price tumbled 35% over the course of 2021. It’s also currently 80% lower than it was 5 years ago.

Sadly, the financial services company has been dealt another blow recently, with investment analyst house Lonsec reportedly downgrading some of its managed funds.

At the time of writing, the AMP share price is 96 cents, 0.52% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.01% today.

Let’s take a look at why Lonsec’s faith in AMP’s investment funds has waned.

Could be the latest blow to AMP?

According to reporting by the Australian Financial Review (AFR), analysts at Lonsec have downgraded 5 AMP index funds.

The publication claims the formerly ‘recommended’ funds have been dropped to ‘investment grade’, meaning the research house believes they have “fewer competitive advantages” than their peers.

The re-rating reportedly occurred late last year and applied to 5 North-branded index diversified investment funds: Growth, High Growth, Balanced, Defensive, and Moderately Defensive.

In a recent investor day presentation, released to the ASX, AMP noted its North platform is a key component of its “Path to new AMP” strategy.

Later, the company announced North’s managed portfolio had surpassed $4 billion of funds under management.

However, the old AMP seems to be plaguing it still.

Lonsec analyst Isrin Khor was quoted by the AFR as saying AMP’s drawbacks include a “material level of corporate uncertainty” and “well-publicised cultural issues and regulatory scrutiny”.

Additionally, Khor was reportedly concerned by high management turnover but noted the company’s new chief investment officer (CIO) Anna Shelley had made “significant progress” in her time with the company.

Shelley was appointed in May. She was previously the CIO of Equipsuper and Catholic Super funds and had worked with JANA and Perpetual Investments.

Finally, the analyst reportedly commented AMP’s funds were relatively expensive compared to those of its peers. An AMP spokesperson told the publication the company would review its charges to ensure they’re competitive.

AMP dropped fees for many of its platform’s funds last year.

AMP share price snapshot

2021 was a tough slog for the AMP share price, and it hasn’t got much better in the new year.

Year to date, the company’s stock has slipped another 4.95%. Though, it has gained more than 5% since this time last month.

Should you invest $1,000 in AMP right now?

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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