Agriculture sector funds carry highest fees

Among sector equity funds available for sale in Hong Kong and Singapore, agriculture sector funds rank highest in average annual fees.

The seven products available for sale in Hong Kong carry an average fee of 1.89%, compared to 1.59% average for all equity funds that focus on sectors (not geographies), according to data from FE.  

The equivalent average for agricultural equity funds available in Singapore, most of which are the same, is even higher at 1.96%.

Technology, financial and real estate equity funds are among the least expensive, with average fees of 1.60%, 1.50% and 1.44%, respectively. 

 

Do agriculture funds deliver value for their fees? The most expensive, the Blackrock GF World Agriculture Fund, charges a 3% annual fee and has recorded a 3-year annualised negative return of 1.43% according to FE.

By comparison, the average agriculture sector performance in Hong Kong was -5.22%.

The low performance of the sector is a result, in part, of the prolonged slump in agricultural commodity prices over the last six years.  After peaking at 1453 in 2011, the Rogers International Agriculture Commodity Index has declined to 787 in 2016 and today remains below 870.

However, the DAX Global Agribusiness Index, one of the industry benchmarks, delivered a positive return of 0.26%. (On a 1-year basis, the index delivered 18%, but none of the seven funds outperformed it, with Baring Global Agriculture coming closest at 15.47%).

The sector’s best performer, Amundi Equity Global Agriculture, delivered 4.52% on a 3-year basis, while charging 2.1% in annual fees, according to FE. (All returns are annualised and net of fees.)

 Agriculture sector funds

Agriculture mutual funds available for sale in Hong Kong.

Funds are denominated in US dollars except as indicated. All returns have been calculated in US dollars.