A snapshot of portfolio allocation:
Source: Fund fact sheets on 31 May
Performance review
The HSBC fund benchmarks its performances against the MSCI Asia-Pacific ex-Japan Small Cap Index. The PineBridge fund, on the other hand, measures its performance against the S&P Pan Asia ex-Japan Under $1.5bn Index.
“If you look at the calendar year performance, between 2007-2014, the HSBC fund performed better [than the PineBridge fund] in five of the eight calendar years. The PineBridge fund’s outperformance mainly came [recently] in 2011, 2012 and 2014.”
Source: Morningstar
Both funds posted negative returns during market downturn periods in 2008 and 2011.
In 2008, the HSBC fund fell less than the PineBridge fund. On the other hand, the PineBridge fund fared better than the HSBC fund in 2011.
“Considering that the HSBC fund has more exposure to small-cap stocks relative to the PineBridge fund, one can safely assume that in the event of a sell-off, we could see more downside from the HSBC fund. The converse may be true also should the market experience a risk-rally.”
However, looking at cumulative returns over specific periods to 30 June, the PineBridge fund has consistently outperformed the HSBC fund.
Source: FE Analytics
The PineBridge product has started to perform more consistently in recent years, Sim pointed out. He attributed the better performance of the PineBridge fund to the stock-picking skills of the fund manager Elizabeth Soon.
Source: Morningstar, performance for time periods until 30 June
The outperformance of the PineBridge fund comes with low volatility, Sim said.
Standard deviation, a measure of fund’s volatility, was higher for the HSBC fund than the PineBridge fund.
“The higher volatility experienced by the HSBC fund could be a function of the fund’s underlying portfolio having a higher proportion to small-cap stocks. The fund has a relatively lower average portfolio market capitalisation than the PineBridge fund, as mentioned earlier.”
Source: Morningstar
Since the PineBridge fund has a higher quality portfolio, it might underperform during liquidity or momentum-driven rallies, when investors pay less attention to company fundamentals, said Sim.
