Posted inHead To Head

HEAD-TO-HEAD: Fidelity versus Schroders

FSA compares two China equity products: the Fidelity China Focus Fund and the Schroder ISF China Opportunities Fund.
by Rupert Walker

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Germaine Share, Morningstar

Introduction

China’s equity markets have enjoyed a sharp recovery since the slump in mid-March amid justifiable fears that the Covid-19 pandemic would induce a severe contraction to the country’s economy.

The MSCI China index is up 19.55% year-to-date, and has surged 47% since its low on 19 March, according to FE Fundinfo.

Domestic investors have taken advantage of lower valuations and cheaper borrowing costs to drive the markets higher, while international funds have rationalised that China is recovering earliest and fastest from the economic consequences of coronavirus.

Technology stocks have been in the vanguard of the rally, buoyed by analysts’ predictions that ecommerce and online gaming habits acquired during lockdowns will persist and drive tech companies’ earnings higher.

In this unstable, confusing environment, Germaine Share, associate director at Morningstar, compared two large China equity funds, with very contrasting investment styles: the Fidelity China Focus Fund and the Schroder ISF China Opportunities Fund.

Fidelity Schroders
Size $2.89bn $1.26bn
Inception 2003 2006
Managers Jing Ning Louisa Lo
Three-year cumulative return -0.61% 36.49%
Three-year annualised return 0.88% 10.70%
Three-year annualised alpha -6.38 2.26
Three-year annualised volatility 21.22% 21.80%
Three-year information ratio -0.81 0.32
Morningstar star rating ** ****
Morningstar analyst rating Bronze Gold
FE Crown fund rating * **
OCF (clean share class) 1.91% 1.84%
Source: FE Fundinfo, Morningstar (Data in US dollars, 4 September 2020)
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