HEAD-TO-HEAD: First State vs Schroders

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The First State fund receives a Morningstar analyst rating of Silver and a five-star rating, while the Schroders fund receives a Bronze analyst rating with a five-star rating.

The analyst rating is a forward-looking analysis of a fund, while the star rating looks at historical risk-adjusted performance.

The FE rating, which measures alpha, volatility and consistency over three years, is four crowns for the First State fund and five crowns for the Schroders fund.

Yew said he prefers the Schroders fund because it has a strategic asset allocation process. “You get that component where a manager decides which asset class is more attractive and allocates accordingly,” he said.

“If Asian equities sell-off, you are not getting that protection when you invest in the First State Bridge Fund because it is always going to be 50/50 for the asset classes,” he added.

However, he noted that investors should always understand the underlying scheme of the Schroders fund. Because it is focused on dividend-yielding sectors, some sectors may be sensitive to rising interest rates.

For example, if US interest rates rises, that may have a bearing on how Asian economies or central banks want to conduct monetary policy, which may affect the equities sleeve of the Schroders fund.

“If I’m an investor and I want to allocate to the Schroders fund, I have to make sure that the rest of my portfolio is not invested in other interest rate-sensitive sectors as well,” he said.

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