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Review: best and worst fund categories in 2019

The best category may be obvious, but the worst performing one needs some explanation.

In the Hong Kong universe, FE Fundinfo classifies funds into sectors, perhaps better described as fund categories.

There are 33 equity fund categories and the best performing one in 2019 was technology/media/telecom (TMT), which includes themed funds such as robotics, AI, cloud computing and 5G, FE Fundinfo data shows.

Not one fund was negative in the category of 27 funds, which in aggregate was up 36% in the year-to-17 December in US dollar terms. It’s a reversal from last year, when the category had a disappointing -9.51% return and is illustrative of TMT volatility.

Among the funds in TMT, the top performer was the Threadneedle (Lux) Global Technology Fund, returning 48.7%.

What is notable about the top five funds was the broad difference in their top ten holdings. Although Facebook and Alphabet recur through a few of the five, their top ten positions were dissimilar. It underscores the comprehensive rise of technology as an investment as well as the breadth of opportunities.

Another point is geographic allocation. In aggregate, TMT funds had marginal investment in Europe, with 9.6% exposure. The bulk was in North America (61%), followed by Asia (14%).

It highlights the fact that Europe is falling far behind in tech innovation.


Best performers in TMT 

Return* Sharpe ratio
Threadneedle (Lux) Global Technology 50.18 2.69
BlackRock GF Next Generation Technology 44.87 2.72
UBS (Lux) Equity Tech Opportunity 43.86 2.50
Fidelity Global Technology 41.71 2.45
T Rowe Price Science and Technology Equity 41.66 2.56
TMT category 35.99 2.48
*January to 17 December. In US dollars. Source: FE Fundinfo.

 

Worst performing category

The only grouping among the 33 equity categories that was in negative territory is Korea, in aggregate returning -0.3% for the year-to-17 December.

The category consists of 10 funds, with only seven that are actively managed. Five of those were in negative territory.

The positive funds in this category were two Korea ETFs and two JP Morgan Korea equity funds.

A characteristic worth mentioning is that every fund in the group had Samsung as the top holding at around 9%. In most of the funds, Hynix was the second largest.

Yet Samsung was up 68% and Hynix rose 65%. Moreover, the MSCI Korea Index increased 11%.

2019 performance would be an interesting topic to discuss with the managers of the funds in the cellar.


Poorest performers in Korea equities

Return* Sharpe ratio
Haitong Korea Equity Investment -9.96 -0.01
Barings Korea Trust -5.24 -0.01
Invesco Korean Equity -4.51 -0.01
Mirae Asset Korea Equity -3.90 -0.01
Allianz Korea Equity -2.11 -0.01
Korea equity category -0.03 0
*January to 17 December. In US dollars. Source: FE Fundinfo.

 

Part of the Mark Allen Group.