HEAD-TO-HEAD: JP Morgan vs Robeco

1234567

Both funds use a bottom-up approach to investment, with focus on value. The JP Morgan fund holds 69 stocks, according to Ng, with a target of 60-120 names. The Robeco portfolio is more concentrated, holding 46 stocks as of 31 March, according to the fund factsheet, with a target of 30-60 companies.

The geographic focus of both funds differs slightly in that JP Morgan invests in the MSCI AC Asia-Pacific ex-Japan universe, while Robeco uses the MSCI AC Asia ex-Japan, also excluding Australia and New Zealand.

JP Morgan’s Roskell rotates his portfolio between overweighting in cyclical and defensive stocks, depending on the market, Ng said.

Defensive stocks are those with lower beta, such as REITS or telecoms. Cyclical stocks include financials, materials, oil and gas and industrials. Within cyclicals, Roskell maintains a strong focus on value stocks, Ng explained.

“It’s a flexible strategy, with a value opportunity and low beta,” said Ng.

There are around 700 companies in the fund’s investment universe. The managers focus on the top one-third of companies that provide a high dividend yield so that the fund generates income.

Because of the focus on high dividend, “you rarely see the fund invested in India, Indonesia and the Philippines,” said Ng. “Also, it has less exposure in IT, consumer discretionary and healthcare.”

The top three holdings on 31 March were Korea Electric Power Corporation, HSBC Holdings, and Bangkok Bank Public Company Limited.

The managers of the JP Morgan fund use currency hedging extensively to manage currency risk. They try to maintain around 70% of exposure to US and Hong Kong dollars, with the remainder in Asian local currencies.

The Robeco fund, by comparison, tends to have higher exposure to low dividend-yielding companies in high value sectors such as IT and consumer discretionary. The fund’s top holdings as of 31 March were Alibaba, Samsung and Taiwan Semiconductor.

“The fund manager tends to focus on companies which benefit from growing Asia consumer spending,” said Ng.

Robeco doesn’t hedge currencies to the same extent as JP Morgan. This has worked to the fund’s advantage so far in 2017, allowing it to benefit from currency movements, Ng added.

1234567