Ng sees better earnings growth prospects for the BlackRock fund than the Schroders product as the latter has higher exposure toward defensive sectors such as consumer staples, telecommunications and utilities.
The BlackRock fund is underweight consumer staples and has the same weight as the benchmark in telecommunications and utilities.
Performance
The BlackRock fund has delivered stronger returns than the Schroders fund over various time periods until 30 April:
The BlackRock fund has tended to perform better than the Schroders fund because US stocks have been performing well. (The Schroders fund has comparatively less allocation to US stocks, as mentioned before).
“On the other hand, the volatility of the Schroders fund was relatively lower during the same periods,” Ng said.
The calendar year performance, as shown below, reveals a mixed picture. The Blackrock fund outperformed the Schroders product in 2013 while the Schroders vehicle outperformed in 2014 and year-to-date:
Higher equity exposure in 2013 helped the BlackRock fund to deliver better returns, according to Ng.
The BlackRock fund is rated by FE as a 4 Crown product. The FE crown rating ranks funds based on alpha, consistency and volatility.
Because the Schroders fund is only three years old, an FE crown rating has not been assigned.
“But if you take sharpe ratio as an indicator to observe the risk-adjusted return, the figure for the Schroders fund is slightly higher than that of the BlackRock fund for the three-year period to 30 April.”
