HEAD-TO-HEAD: Blackrock versus Fidelity

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Samuel Meakin, Morningstar

Introduction

The comparatively low valuations of global financial equities have recently been highlighted by several asset managers.

For example, Goldman Sachs Asset Management believes that there are pockets of opportunities in European financials because of their cheaper valuations.

Financial companies in India have also provided opportunities for investors. Over the past three years, the two best performing India funds in the SFC-registered universe, Manulife India Equity Fund and the JGF-Jupiter India Fund, have financials as their highest sector exposure.

Even financial companies in Russia are seen to be positive stocks to hold by Pictet Asset Management, especially since their valuations have gone down due to geopolitical concerns, which have had no impact on their fundamentals.

Some can also help anchor portfolios. Globally, two financial stocks – Visa and JP Morgan Chase – are among the top 10 companies that are widely held by asset managers, according to an Evestment report.

However, Samuel Meakin, senior analyst for manager review at Morningstar in London, noted that financials can be more volatile than the broader market. On a three-year annualised basis, the MSCI ACWI/Financials Index volatility is 13.27, which is higher than the 11.3 volatility of the MSCI ACWI Index, according to data from FE Fundinfo.

Against this backdrop, FSA asked Meakin to compare two global financial equity funds: the BGF World Financials Fund and the Fidelity Global Financial Services Fund.

Source: Morningstar, FE Fundinfo

*30 January 2017 – 30 January 2020

**28 January 2017 – 24 January 2020

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