Fund performance
Share said that Principal’s fund has performed well from 2013 to 2015, outpacing the Hang Seng index by 342 basis points per annum. She said that because his screening process looks at stocks frequently — on a weekly basis — it is well-suited for volatile markets. Given the volatility in Hong Kong and China in 2015, she is expecting the fund to deliver strong performance for the year.
For the Schroder fund, Share said that it would outperform when markets are driven by fundamentals. She added that she expects the Schroder product to underperform this year.
A look at both of the funds’ annualised total returns and volatility:
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015* | |
| Principal | 74.23% | 17.25% | -18.11% | 25.39% | 10.05% | 2.77% | -8.47% |
| Schroder | 72.22% | 21.16% | -20.40% | 26.81% | 7.48% | 4.20% | -10.88% |
| Beta | Volatility | |
| Principal | 0.94 | 15.97 |
| Schroder | 0.85 | 13.46 |
In 2014, the Principal fund returned 2.77% and underperformed its custom benchmark by 110 basis points, Share noted. A key reason was the underweighting in China Life Insurance, which Wang did not favour because of the company’s thin margins.
Macau gaming names such as SJM Holdings and MGM China also dented the fund’s portfolio, and Wang has entirely exited those positions.
The Schroder fund has underperformed the Hong Kong stock market so far in 2015. But the main concern is the fund’s asset growth during the past year, Share said. Its assets under management reached $3.53bn as of 31 May 2015, raising concerns about capacity.
“That said, we are somewhat comforted by the fund having been soft-closed for a few years and its predominantly large-cap focused strategy,” Share said.
Manager review
Share said that Wang’s relatively short track record is a concern. Wang returned to the fund in December 2012, after having first managed the fund between its launch in November 2005 and March 2008.
