The FSA Spy market buzz – 22 November 2024
Dimensional excludes the Middle Kingdom; JP Morgan’s optimistic outlook; Household wealth is rocketing; Schroders is thinking about privates; Ninety One’s pithy AI; German woes and much more.
HEAD-TO-HEAD: First State vs JP Morgan
FSA compares the First State Global Resources Fund and the JP Morgan Global Natural Resources Fund.
Annual performance. Source: FE
The two funds use different benchmarks. First State benchmarks itself to a composite of 75% Euromoney Global Mining index and 25% MSCI AC World Energy.
JP Morgan uses the Euromoney Global Gold Mining & Energy Index.
Both funds show a higher volatility with respect to the sector average, underperforming it in the down years 2013-15 and outperforming in 2016.
Over the trailing three years, the First State product’s weekly volatility was 27.05 compared to 25.42 for JP Morgan, FE data shows.
Sector volatility for the same period was 17.80.
| First State | JP Morgan | |
| 1-year total return | 43.08% | 58.69% |
| 3-year total return | -7.43% | -1.96% |
| Return during the manager’s tenure | -2.07% (since Feb 2007) | -9.36% (since Jan 2012) |
| Alpha | -3.99 | -6.51 |
| Beta | 1.31 | 1.38 |
| Sharpe Ratio | -0.17 | -0.30 |
Source: Morningstar
“JPM Global Natural Resources is the fund that has the higher beta generally due to the bias toward small and mid cap names,” Kizhou said.
Because of that, “JPM tends to capture more of an upside than First State,” she added. JPM would thus show better performance in strong rallies of the commodity cycles.
JP Morgan benefited in the second half of 2016 from an overweighting in energy. On the other hand First State’s larger allocation to diversified global miners helped the fund’s performance.
The JP Morgan manager Gregson has a good record of correctly timing gold prices, according to Khizou.
“He lowered the allocation to gold at the right time last year and it has been beneficial to the fund’s performance.”
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