Manager Review
The Fidelity fund has been managed by Dale Nicholls since 2003.
“Nicholls is not a benchmark follower, as seen in his long-term strategy of having strong underweight positions on Japan and Australia, and strong overweight positions on China and India,” Ng said.
In terms of sector, he has a stronger focus on consumer discretionary and technology stocks, which often have more volatile trading patterns. “But these stocks present innovative growth models and huge investment opportunities,” Ng said.
The GAM fund has been managed by Michael Lai since 2004. Ben Williams, who previously managed Japanese funds for the firm, has co-managed the fund since 2012, Ng said.
“The stock selection process begins with a top-down approach that drives the allocation between Japan and the ex-Japan region, and thereafter the team picks stocks that tend to benefit from the growth of China, as well as the region as a whole,” he said.
Fees
Ng said the latest ongoing charges (OCF) of the Fidelity fund are 1.93% (Class A-US dollar), higher than that of the GAM fund of 1.72% (ordinary share class).
“I do not have a significant concern regarding the fees of the two funds in terms of fund selection, as they are pretty much in line with their peers,” Ng said.
Conclusion
Both funds have been adding to their positions in Japanese equities over the past year, as they see signs of improving corporate governance and shareholder-friendly policies among Japanese companies. But the Fidelity fund’s exposure to Japan remains far lower than that of the GAM product, Ng said.
Ng said he has a preference for the Fidelity fund, as its fund manager has a solid track record of generating strong alpha consistently in terms of stock selection in most areas across the region.
“He is able to outperform in both rising and falling markets throughout different cycles, and at the same time, maintaining a market beta that is close to one,” Ng said.
On the other hand, the GAM fund would likely perform well with a broad-based economic recovery across the region, as the fund has a stronger focus on traditional large-cap cyclical stocks, Ng said. “However, this is not likely to happen in the near term.”
