HEAD-TO-HEAD: Aegon Industrial versus E Fund

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INTRODUCTION

With China being the first economy to lift lockdown measures in the world, its equities market has outperformed globally, with the CSI 300 Index returning 23.69% on a year-to-date basis, which compares with the single-digit returns of just 4.87% of the MSCI ACWI Index, according to data from FE Fundinfo.

Several asset managers continue to be positive over the asset class, driven by long-term secular growth themes.

For example, Joanna Kwok, fund manager at JP Morgan Asset Management, said recently that the growing affluence in China is resulting in “premiumisation” or the shift to higher quality goods and services.

“This is a multi-year trend which could at times be slowed by cyclical factors but which will not be derailed by them,” she said. “We continue to see a good opportunity in Chinese equities, despite the fact that they’ve already had a strong year.”

Valuations, however, have become a concern for some investors. Ricky Tang, deputy head of multi-asset for North Asia at Schroders, previously said that the share prices of some companies, particularly in the internet and e-commerce space, have continued to go up despite some of them already lowering down earnings growth estimates in the next five years.

However, there are some names that are still expected to provide strong earnings in the next two-three years.

“We still find some good, long-structural winners, which are relatively cheaper.”

Against this background, FSA asked Claire Liang, Shenzhen-based senior analyst for manager research at Morningstar, to compare two onshore aggressive mixed-asset products: the Aegon-Industrial Herun Structured Mixed Fund and the E Fund Kexiang Fund.

Aegon-Industrial Fund Management is the 18^th largest domestic fund manager (excluding money market funds) in China, with RMB 168bn ($25bn) in assets as of the end of June, according to data from Morningstar Direct. Founded in 2008, it is the joint venture of Netherlands-headquartered Aegon, which owns 49% of the JV, and Industrial Securities, which owns the remaining 51%.

E Fund Management, meanwhile is the largest manager in China (excluding money market funds), with assets of around RMB 522bn. E Fund was founded in 2001 in Guangzhou and has an offshore subsidiary in Hong Kong.

Source: Morningstar

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