HEAD-TO-HEAD: Invesco vs JP Morgan

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Income-oriented funds remain popular among Asian investors, as a means to generate income in response to the ongoing low interest rate environment. While the growth-oriented investment style was increasingly popular in 2017, a substantial proportion of investors still look for income, according to Luke Ng, senior VP of research at FE Advisory Asia.

Funds investing in income-generating equities in developed markets can benefit from companies with long and stable dividend histories. However, those focusing on Asia can tap into dividend growth and a higher potential of capital growth, Ng told FSA.

Fixed-income sleeves of such funds can also benefit from relatively high-yielding Asian bonds as well as the low correlation of this asset class with equities and developed market bonds, Ng said.

Globally, mixed-asset funds, with $3.68trn of assets, constitute around 10% of AUM in collective investment vehicles (the number includes mutual funds and ETFs). They accounted for around 9% of estimated net flows into all products in 2017, according to data from Morningstar as of 30 November 2017.

Asia-Pacific mixed asset funds account for around 23% of all mixed-asset funds authorised for sale in Hong Kong, according to data from FE. Measured by assets under management, the Asia-Pacific funds constitute around 10% of the AUM in all mixed-asset funds. Notably the latter category includes global emerging market funds, many of which likely have a substantial allocation to Asia-Pacific.

Against this backdrop, FSA compares two Asia-Pacific mixed-asset funds: the Invesco Asia Balanced Fund and the JP Morgan Asia Pacific Income Fund.

Data: FE, fund fact sheets

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