Posted inHead To Head

HEAD-TO-HEAD: Invesco vs JP Morgan

FSA compares two funds focused on South Korea as the country hits economic headwinds.

A look at cumulative performance returns:

   6 months   1 year   3 years   5 years 
 Invesco   26.09%  13.15%   58.12%   70.67% 
 JP Morgan   -5.00%   -22.00%   -7.30%   4.30% 
Source: FE Analytics, Invesco, JP Morgan

Ng noted that this year is a challenging year for both of the funds. In the first half, the economy was hit by the Middle East Respiratory Syndrome, which significantly weakened household spending and market sentiment.

On the export front, weakening demand from China means that sales of electronics and chemicals will be affected in the short to mid-term. At the same time, South Korean exports are also facing stiff competition from Japan. The depreciating Japanese yen has eroded the competitive advantage of Korean exports.

A snapshot of calendar year performance:

   YTD   2014   2013   2012   2011 
 Invesco   22.67%   10.72%   5.05%   2.75%   -6.12% 
 JP Morgan   -8.60%   -12.40%   5.20%   19.22%   -21.40% 
Source: FE Analytics, Invesco, JP Morgan

Ng pointed out that in 2011, the JP Morgan fund underperformed when it chose to remain underweight in the automotive sector. That year, the tsunami disaster in Japan affected the Japanese automotive industry, and subsequently South Korean automotive companies benefitted and their valuations rose.

He also noted that the level of volatility is higher for the JP Morgan fund as stock rotations between sectors tend to be more frequent given the fund’s opportunistic nature. A look at both funds’ volatility:

   Beta   Volatility 
 Invesco   0.79   12.43
 JP Morgan   1.06   14.48
Source: FE Analytics, Invesco, JP Morgan


Manager review

Jeong started his career with Invesco in 2006. Based in Hong Kong, he manages Korean equity portfolios and has 28 years of experience covering Korean equities.

He is mainly supported by his assistant, Gayle Chan. She provides macroeconomic research and monitors the in-house earning model (an internal model that measures the projected earnings of Korean equities on 3-year financial data). 

Part of the Mark Allen Group.