HEAD-TO-HEAD: AB versus Blackrock

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The AB fund vs its benchmark (S&P 500); the Blackrock fund vs its Benchmark (Russell 1000) and the sector performance in Hong Kong. In US dollars. Source: FE

Performance

Both the AB and Blackrock products behave differently in different market conditions, according to Wolfstetter.

For example, since the AB fund aims to limit downside risk, it fell less than the Blackrock fund in calendar year 2018.

“It was simply more resilient especially in the fourth quarter, and that is reflective of the performance differential.”

Discreet calendar year performance

Source: FE Analytics

However, because of its focus on limiting downside risk, the fund is expected to underperform during market rallies.

The opposite is true for the Blackrock fund: it was able to outperform the AB fund during the market rally in 2017, according to Wolfstetter. However, the fund had a more difficult time in 2018 when the market was down.

Wolfstetter noted, however, that both products have consistently underperformed their benchmarks.

“[The US equity markets] are difficult to outperform, especially because a lot of the outperformance is driven by the tech sector. But the two funds are actually doing better on a peer-relative basis,” she said.

In terms of volatility, Wolfstetter expects the AB fund to be less volatile than the Blackrock product because of its aim to limit downside capture.

Three-year annualised volatility

Source: FE Analytics

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