Posted inHead To Head

HEAD-TO-HEAD: Fidelity vs Schroders

This week Fund Selector Asia takes a look at two funds that seek to invest in emerging Asian markets.

The heavyweight in this category is of course China. But as mainland markets go through wild swings and regulators attempt to stabilise them, attention is moving to India.

Investors are focusing on Indian corporate sector earnings and generally have become more patient with the country’s much-touted economic reforms, which many expect to start bearing fruit over the medium-to-long term.

ASEAN markets, by comparison, tend to be overvalued and underperforming as the economies face macroeconomic pressures.

Against this backdrop, Fund Selector Asia takes a look at the Fidelity Emerging Asian Fund and the Schroders ISF Emerging Asia.

In terms of investment style, the Fidelity fund is growth-focused while the Schroders fund has a mix of both growth and value stocks.

Even though both funds are named emerging Asia, their investment universes differ, said Germaine Share, analyst, manager research at Morningstar Investment Management Asia. She provides a comparative analysis.

Investment strategy review

The Fidelity fund benchmarks its performance against a custom benchmark comprised of a 33.3% weighting to the MSCI China, 33.3% to the MSCI India and 33.3% to the MSCI Malaysia, Indonesia, Thailand and the Philippines.

The Schroders fund is benchmarked against the MSCI Emerging Markets Asia Index, which includes countries such as Taiwan and South Korea, Share pointed out.

“The key difference is the Fidelity fund has a higher exposure to India than the Schroders fund.“

Fidelity’s vehicle also has zero exposure to South Korea and Taiwan, while the Schroders fund has a meaningful allocation to these two countries, Share said.

The Fidelity fund portfolio typically contains growth-oriented companies, but Teera Chanpongsang, manager of the fund, is open for investment in stocks that are underappreciated.

The Fidelity fund runs the more diversified portfolio of the two with 90-120 companies, said Share.

The Schroders team adopts a stock selection process that focuses on a rigorous assessment of growth and valuation, according to Morningstar. The investment team applies quantitative and qualitative screens to filter its universe to about 560 stocks, which it narrows to 30 – 80 holdings.

A snapshot of portfolio allocation

 Source: Fund fact sheets on 30 June

Part of the Mark Allen Group.