HEAD-TO-HEAD: Blackrock vs Schroders

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The three-year cumulative performance of the Blackrock and Schroders funds versus their benchmark index, according to FE Analytics.

Both the Blackrock and Schroders funds outperformed their benchmark index on a three-year cumulative basis. Although the Blackrock fund was outperforming the Schroders fund at the beginning of the period, it started to underperform the in 2017.

Share said that Swan’s rotation into value stocks benefited the Blackrock fund in 2015. However, it did not perform well in 2017 when growth-driven stocks performed better.

“[Swan] was underweight growth because they were expensive sectors, which he steered away from.”

The Schroders fund benefited more than the Blackrock fund when growth stocks performed well in 2017, which was expected given its growth strategy.

In terms of the funds’ consistency, Share said it is harder to predict the performance of the Blackrock fund given its flexible approach.

“So it is switching in and out of styles, which makes it really hard to predict. [Performance] relies on whether they got their call right. While Swan has done very well in the past in making good calls, last year was the year that really disappointed.”

On the flipside, Share believes that the Schroders fund’s performance is more consistent.

She also noted that the Blackrock fund may probably have a higher upside capture potential. However, its downside is probably more severe than the Schroders fund.

“Given that the Schroders fund has a quality focus, it may not fully capture the upside when there is a strong bull market. But what they really do well is in the down markets. It usually has a better downside protection.”

From a volatility standpoint, Share said that the Blackrock fund will be more volatile than the Schroders fund given that it rotates in and out of sectors.

Three-year annualised volatility

Source: FE Analytics

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