HEAD-TO-HEAD: AB versus Blackrock

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Natalia Wolfstetter, Morningstar

Introduction

This year, investment in US equities has continued despite the S&P 500’s record highs and what some say are high valuations. Among those bullish firms are Pictet Wealth Management and Barings.

David Gaud, Asia chief investment officer at Pictet WM, said that he prefers developed market equities, such as quality companies in the US, over emerging markets.

“Emerging market equities have underperformed developed market equivalents this year, in spite of a robust performance from Chinese and Indian [market] equities,” he said.

Year-to-date, the S&P 500 (17.12%) has outperformed the MSCI AC World Index (15.79%) and the MSCI Emerging Markets Index (12.43%), according to data from FE Analytics.

However, capturing opportunities in US equities has become a difficult task for active managers, according to Natalia Wolfstetter, director for fund analysis at Morningstar.

“Active managers [focusing on US equities] are struggling to attract investor interest because of the passive competition. Given that the benchmark is hard to beat, passive alternatives [such as ETFs] are hard to beat as well.”

On a three-year cumulative period, the overall US equity sector for SFC-authorised funds returned 40.88%, which is less than the S&P 500’s 48.97%.

Against this backdrop, Wolfstetter compares two US large-cap equity funds: the AB Select US Equity Portfolio and the Blackrock BGF US Flexible Equity Fund.

Source: Morningstar, FE Analytics

*2 May 2016 – 2 May 2019

** April 2016 – 26 April 2019

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