FSA believes singling out the top performers based on independent, data-driven criteria can provide a fund house with a valuable distinction among its peers. However, the process has to be clear, transparent and objective. FSA uses historical and forward-looking screens — both quantitative and qualitative methods of selecting the winners.
How it’s done
FSA’s awards are based on data from FE Advisory Asia, which filters the universe of funds in Hong Kong (1345 eligible funds) and Singapore (2652 eligible funds) for alpha, volatility and consistency across 14 categories. FE then creates two shortlists – one for Hong Kong and a separate one for Singapore.
(In Hong Kong, funds have to be registered for retail sale to be eligible. In Singapore, funds with “Accredited Investor” status are eligible).
The methodology for the shortlists is 100% quantitative, providing an apples-to-apples comparison, according to Luke Ng, senior VP of research at FE Advisory Asia.
Fund selector judges
Next, the shortlists are given to independent panels of well-known professionals from Asia’s fund selector community. Hong Kong and Singapore have separate judging panels to reflect the difference in offerings.
Only one question was provided to guide them, and it was forward-looking:
Given this list, which fund within each asset class do you think will perform best over the next 12 months?
The judges’ selections will determine the winners (Platinum and Gold). Winners will be revealed in early January.
Asia fund trends
After compiling the shortlists, the team at FE noticed a few trends that give a snapshot of the regional fund landscape.
The most competitive asset classes in Hong Kong, where the scoring was very close among the top performers, were Asia Pacific Equity and Emerging Market Bonds, Ng said.
In Singapore, it was Sector Equity and Global Equity.
“However, overall, with more funds participating in the Singapore awards, the competitiveness in Singapore was more intense than in Hong Kong,” he said.
Across all categories, Hong Kong’s shortlist comprises 128 funds. Roughly 55% of funds from last year’s shortlist managed to get on this year’s shortlist, indicating that nearly half the products continued to perform well, Ng said.
In Singapore, the shortlist is made up of 140 funds. But there was higher turnover with less than half (about 43%) from last year’s shortlist reappearing this year.
Looking at individual categories, in Hong Kong the highest turnover was in regional bonds. Seven of the 10 funds on the shortlist were new this year.
The lowest turnover was in Asia Pacific equities. In this category, only two funds out of the 10 on the shortlist were new this year.
In Singapore the highest turnover was in global bonds. Nine of the ten funds on the shortlist were new. The lowest turnover was in Japan equities, which had three new funds out of ten on the shortlist.
“Low turnover means that most of the same funds from last year in a specific category continued to do well,” Ng said.
Next week, FSA will publish the shortlists, one for Hong Kong and one for Singapore, and winners will be revealed in early January.
