HEAD-TO-HEAD: HSBC vs JP Morgan

1234567

The JPMorgan fund carries the Morningstar analyst rating of Bronze, which puts it above the HSBC Asian Bond Fund’s Neutral rating.

Yew explained that this difference may be, to some extent, a reflection of Morningstar’s conservative bias when initiating new coverage of funds. The company started covering the HSBC Asian Bond Fund in 2016.

Between the two funds, Yew has a preference for the JPMorgan product. Chang, its manager, has a longer track record, delivering an approximate 5% annualised return over numerous market cycles and adhering to the 3%-6% volatility target.

“Chang is highly experienced,” said Yew. “We’re very comfortable with the process. We’re seeing [it] applied pretty consistently over market cycles.

“JPM is an all weather fund,” Yew added. Although it does not have a return target, investors can expect “mid-single digits” returns across market cycles, he said, with volatility below 6%.

This is perhaps another reason for the large capital inflows of the fund via the MRF scheme. It provides higher yield and it frees investors from decisions on how to generate return within the bond space.

“It would help investors who do not have the expertise to decide whether they want to put more in credit or currencies,” said Yew. “This fund will be able to allocate their assets accordingly.”

“The HSBC Asian Bond Fund is more benchmark-aware,” he said. Most of the return comes from the US dollar credit space.

“It is more suitable for investors who have expertise on the asset allocation level, and want to use this fund to get more credit exposure in the Asian bond market.”

1234567