HEAD-TO-HEAD: Alliance Bernstein vs JP Morgan

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Pictured above: Luke Ng, FE

Developed markets outperformed emerging markets for most of the period since the global financial crisis of 2008. Although the fortunes reversed in 2017, when emerging markets started catching up, there remains a gap in valuations, which makes the sector attractive to investors.

“I am still positive on emerging markets for 2018, due to lower valuations, strong corporate earnings growth and the weak US dollar,” Luke Ng, senior VP of research at FE Advisory Asia, told FSA.

Ng is particularly optimistic about Asia, which accounts for roughly 70% of the MSCI Emerging Markets Index. “The earnings recovery has been quite broad-based throughout the region over the last year,” he said.

But the current low volatility in the market is not sustainable, he noted. “At some point, investors will start to rotate into previously underperforming stocks,” he said. “Value stocks should perform better following a strong run in growth and momentum.”

In this view, Ng agrees with T Rowe Price’s Ernest Yeung, who also sees opportunities among emerging market value stocks.

FSA compares two emerging market equity funds: the Alliance Bernstein (AB) Emerging Markets Growth Portfolio with the JP Morgan Emerging Markets Equity Fund.

Both funds have been featured previously. The AB fund was compared against the Fidelity Emerging Markets Fund in August 2015. The JP Morgan fund squared off against the Stewart Investors Global Emerging Markets Leaders Fund in February 2017.

However, because emerging market optimism is running high in 2018, we have decided to compare them against each other.

Data: FE, fund factsheets

Correction: The OCF of the AB fund has been changed to reflect the same share class as the JP Morgan fund.

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