HEAD-TO-HEAD: Aberdeen vs Matthews Asia

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Performance

Both funds did relatively well the past three years, delivering around 20% in cumulative returns. The return of the Matthews Asia fund was slightly higher than that of the Aberdeen fund, but it underperformed its benchmark, the S&P BSE 100 Index. The Aberdeen fund outperformed its benchmark, the MSCI India Index.

During the trailing 12 months (ending May 31), the Matthews Asia fund did much better, delivering double the performance of the Aberdeen fund and handily beating its benchmark.

The biggest difference, however, is on the scale of five years, Ng noted. The Aberdeen fund delivered a 60.9% cumulative return over the past five years, while the Matthews Asia returned 80.7%. Both beat their benchmarks by double digits.

The key to understanding the difference is 2014, the year in which the Matthews Asia product returned 53.5% and the Aberdeen fund 34.2%.

“The Matthews Asia fund benefitted from an overweight in small- and mid-caps in 2014,” said Ng. “It also benefited from a smaller focus on reform-orientated businesses, such as materials, energy and utilities. These sectors were hit by lower commodity prices that year, which led to lowering of capital expenditures.”

He added that Matthews Asia prefers businesses that are less policy-dependent, where the company management has better control of its fortunes, which should help them navigate during macro headwinds.

Data: FE, returns in US dollars, as of 31 May 2018.

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