HEAD-TO-HEAD: CCB Principal vs E Fund

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As the CCB Principal fund set up the H class for Hong Kong investors only in June last year, FSA compares the two funds’ performance using their A class for onshore investors.

The CCB Principal and E Fund products had three-year annualised returns of 14.82% and 30.33%, respectively, both outperforming the category average.

“However, the CCB Principal fund had a relatively poor performance measured by its one-year return,” Yao said.

“The fund has a bias toward small-cap growth stocks. Therefore, when the market began to shift from growth to value in recent years, it is reasonable to have a relatively weak performance compared to its historical performance,” he explained.

“The impact from stock positions on the fund’s performance cannot be ignored,” he noted. For instance, the fund outperformed in the first half of 2015 due to its relatively high stock position (>18%), and it also performed well in the second half of the same year because its stock position had been promptly reduced (<12%) before June 2015.”

By comparison, the E fund product has shown consistent outperformance, which is significantly above the category average, he continued.

“Asset allocation and equity selection would be the key factor. We can see its top 10 [equity] holdings are all stocks with above-index performance.

“However, the high returns also come with a high variation of fund performance. By the end of 2016, the fund’s three-year and one-year standard deviation and maximum drawdown are both far beyond category average.”

The difference in volatility is stark. E Fund’s three-year volatility, in terms of standard deviation, is very high at 20.79 compared to CCB Principal’s 6.98.

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