HEAD-TO-HEAD: Invesco vs iShares

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The iShares ETF has had strong cumulative performance over one- and three year periods compared to the Invesco fund, which was in negative territory. The ETF also carries substantially lower fees than Invesco.

However, investors should be aware that the ETF’s performance is largely driven by the heavy index weighting of Samsung and related companies. If Samsung underperforms, an index-tracking product will likely follow.

Turning to the Invesco fund, Ng said that Jeong is unique in his core quality approach to Korea’s equities. “I don’t think there is anyone else using this method.

“If you invest in an active manager’s fund, you need to have a belief that the way he invests could outperform the market,” he said. “If you invest close to the benchmark, why not invest in a passive fund?”

“Jeong has his own way to invest and over the last few years he’s proved that he could deliver alpha,” Ng continued. “This is why he outperformed quite a lot over the last few [calendar] years.”

While the iShares ETF is strongly influenced by the fortunes of Samsung, the Invesco fund is negatively affected by cyclical sentiment.

Ng noted that the investors should understand the pros and cons of Jeong’s strategy. “When the cyclical sentiment improves in the market, the fund could underperform,” he said.

“But if the investors agree with the philosophy of the fund manager, and they wants to grow  money over long term, they should stay with it.”

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