The FSA Spy market buzz – 24 March 2023
Bitcoin rolling futures, new fund pricing models gather pace, greenbleaching, sustainable bonds (not), thematic investing at the top; consultant jokes, Munger’s wisdom and much more.
Both funds have performed well, and their focus on top quality companies has paid off, even if the managers use different measures to determine their selections, according to Cheung.
However, the First State fund is more highly rated by the leading independent research firms.
Morningstar, whose star rating criteria is based on historical risk-adjusted returns, has awarded the product a maximum five stars and a (forward-looking) analyst rating of silver, but assigns the ASI fund three stars and a neutral analyst rating.
FE Fundinfo, which bases its assessment on a fund’s three-year history of delivering alpha, minimising relative volatility and producing consistent returns, also awards the First State fund its highest five crown rating, as well recognising Lau and Jones with alpha manager ratings. In contrast, the ASI fund receives three crowns.
Cheung also leans decisively towards the First State Asia Equity Plus Fund.
“Its emphasis on companies with strong balance sheets means that the fund offers reliable downside protection,” he said.
“Lau exercises a consistent investment philosophy, with an unwavering focus on high quality companies which can thrive during good times and are resilient in difficult economic and market conditions,” he added.
The anxiety prompted by the coronavirus outbreak might drive some investors towards a product such as the First State fund with its more defensive qualities.
But, irrespective of circumstances, Cheung would opt for the First State fund.
“In emerging markets, a company’s balance sheet strength is its most important feature. Lau and his team across Asia never lose sight of that fact,” said Cheung.
Part of Mark Allen.