HEAD-TO-HEAD: Aberdeen Standard versus JP Morgan

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Investment process

Both the ASI and JP Morgan funds have several similarities, according to Ng.

In terms of market-cap exposure, both products invest across the mid- and large-cap spectrum. Portfolio concentration is also similar, with the ASI fund investing in around 40 stocks, while the JP Morgan fund holds 50 stocks.

Source: Morningstar Direct

Both products also have a focus on quality, identifying companies with strong balance sheets, stable management and sustainable earnings growth.

However, the strategies are different. While the ASI fund is more valuations-conscious, the JP Morgan fund is willing to pay a premium for companies that have high growth, Ng said.

“Even before the merger with Standard Life in 2017, the ASI fund had historically been focused on quality and the team spends a lot of time meeting with the companies that they invest in to understand their business models.

“The product continues to have this strong focus on quality, but after the merger, they have taken into consideration Standard Life’s approach of investing in companies that have turnaround stories,” Ng said.

Ng noted that while there is no “major change” in strategy, the ASI fund now takes advantage of mispricing opportunities of out-of-favour quality stocks.

“The fund takes into account valuations and puts more weightings on companies that have reasonable prices,” he added.

Turning to the JP Morgan fund, Ng said that although the strategy has a strong bias toward growth companies, “the managers of the fund are willing to pay for higher multiples to capture long-term growth.”

Source: Morningstar Direct

Looking at both funds’ value and growth metrics, the ASI fund’s price-to-earnings and price-to-book measures are lower than the JP Morgan fund’s, according to data from Morningstar Direct.

Ng pointed out that the products have different benchmark indices. The ASI fund has the MSCI Japan Index as its benchmark, while the JP Morgan fund’s benchmark is the Topix Index. However, the difference in benchmarks is negligible.

Given the differences in strategies, the sector allocations of both products are different. For example, the ASI product has invested more in cyclical names, particularly in basic materials, while the JP Morgan fund has invested more in growth sectors, such as technology, according to data from Morningstar Direct.

Sector allocation (%)

Source: Morningstar Direct

Top 10 allocation (%)

Source: Morningstar Direct

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