HEAD-TO-HEAD: Comgest vs Robeco

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The Comgest and Robeco product both tend to invest in large caps with a concentrated portfolio of less than 50 holdings. “Both funds run a high-conviction, highly concentrated portfolio, and focus on the best ideas,” said Caquineau.

But their investment strategies are very different and in a sense can be complementary, he noted.

The Comgest fund, launched in 2003, aims for quality growth using a pure bottom-up stock selection process. “The manager looks for companies with stable earnings growth that also have a competitive advantage in the industry, regardless of the economic cycle.

“The team typically avoids banks, oil, mining or basic materials stocks, as their profits are too cyclically driven and hence not easily predictable.”

The resulting portfolio has a tilt toward certain sectors that are focused on domestic growth – technology, telecom and consumption-related companies.

Selected sector allocation %, as of April 30

Source: Fund factsheets, Morningstar 

The Robeco fund, in contrast, combines both top-down and bottom-up analysis.

“A top-down assessment leads to a country allocation whereby 80% of the assets are invested in five countries (the Comgest fund has no country allocation requirements). The Robeco team look for fundamental factors such as macro economy, political risks, earnings expectations and valuations.”

The bottom-up part consists of both quantitative and fundamental research. Valuation also plays an important role in the Robeco fund. “The manager prefers stocks that are mispriced or undervalued,” Caquineau said.

In terms of country allocations, the exposure to Korea for the Robeco fund reached 29.3% at the end of April while the Comgest fund had a 5.5% allocation and the funds’ benchmark MSCI Emerging Markets Index had 14.9%.

The Korean equity market has relatively low valuations compared to others due to corporate governance issues,  Caquineau explained. “It also has a lot of exporters, which is not an area for the Comgest fund to find opportunities. Korea is favoured more by Robeco as there are more discounted stocks.”

On the other hand, the Comgest fund is overweight China (31.7% as of April-end, versus benchmark’s 27.1% and Robeco fund’s 17.1%) due to concentrated exposure in Chinese life insurers, which are expected to benefit from the growth of the life insurance business in China thanks to their extensive sales networks.

The Comgest portfolio has a low turnover of about 20-30% a year because the investment horizon is three-to-five years. Caquineau pointed out that three of the fund’s top five holdings have been in the portfolio for eight years or more. The Robeco fund has a higher turnover at around 40-50% a year, he added.

Top holdings of Comgest fund, as of April 30

Top holdings of Robeco fund, as of April 30

 Source: Morningstar

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