HEAD-TO-HEAD: Aberdeen Standard versus Schroders

123456

Andrew Daniels, Morningstar

Introduction

Asia-Pacific (ex-Japan) equity funds had huge outflows last year as investor sentiment was weighed down by concerns over the US-China trade tensions and a slowdown in global growth.

For the full year 2019, global investors redeemed $4.3bn from Asia-Pacific (ex-Japan) portfolios, according to data from Morningstar Direct.

However, several investment professionals now have a positive outlook for the asset class.

For example, Mike Jennings, London-based senior investment strategist at TT International, believes that last year’s headwinds for emerging market equities, including Asia-Pacific, have dissipated.

“Trade tensions are easing off substantially. We also expect that the rise of the US dollar last year will moderately drift lower, which should be good for emerging market outperformance,” he said recently.

Catherine Cheung, Citi Private Bank’s head of Asia-Pacific strategy, also has an optimistic outlook for Asian markets, where she identifies five “unstoppable trends” that will drive corporate earnings and investment returns.

These trends include the region’s role as “the world’s engine of growth” – powered by innovation, population and urbanisation, increasing demand for healthcare, the roll-out of 5G technology that will “revolutionise data-driven business”, new technologies such as robotics, artificial intelligence and blockchain, and more prosaically, the fact global investors are underweight Asia despite the region’s prospects and relatively low valuations of its markets.

Invesco’s David Chao, global market strategist for Asia ex-Japan, also favours Asia ex-Japan equities, which he believes are more attractive than the US.

Against this backdrop, FSA asked Andrew Daniels, Hong Kong-based senior analyst for equity strategy manager research at Morningstar, to compare two Asia-Pacific (ex-Japan) equity products: the Aberdeen Standard Sicav I – Asia Pacific Equity Fund and the Schroder ISF Asian Total Return Fund.

Source: Morningstar, FE Fundinfo

*11 February 2017 – 7 February 2020

**13 February 2017 – 13 February 2020

123456