The First State fund receives a Morningstar analyst rating of Gold and a five-star rating, while the Principal fund receives a Neutral analyst rating and a four-star rating.
Morningstar’s analyst rating is a forward-looking analysis of a fund, while the star rating looks at historical risk-adjusted performance.
Analysts assign the analyst rating on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating. A Gold, Silver, or Bronze rating means analysts expect it to outperform over a full market cycle of at least five years.
Share likes the quant approach of the Principal fund. Compared to First State’s product, the fund has a better chance of performing well in a bull market, especially since the team screens investments for one-year earnings per share revisions.
However, Share prefers the First State fund, given Lau’s comparatively longer track record of managing the fund.
In addition, First State’s managers invest half of their bonus into the funds that they manage, she said.
“That means [the managers] will care more about the performance of the fund and they would be more likely to do what’s best for the investors because they have their own money invested there,” she said.
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