HEAD-TO-HEAD: Allianz versus Schroders

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Ronald van Genderen, Morningstar

Introduction

Equities has hardly been flavour of the month among fund selectors as higher interest rates have pushed up discount rates, leading to multiple compression and a sell-off across growth stocks.

Numerous banks and asset managers have downgraded their outlook on the asset class. Last month, Credit Suisse’s global chief investment officer, Michael Strobaek, revised the bulge bracket bank’s view on the asset class to underweight.

“A slowing economy across geographies is exacerbating pressure on market dynamics and we think that risk assets, especially as they relate to corporate earnings, face further downward adjustments in the months ahead,” he said.

T Rowe Price’s head of international equities and chief investment officer, Justin Thomson, told FSA earlier this month that he was “patiently bearish” on equities. He said that there was still much further to go before the markets bottomed out, echoing Strobaek’s comments.

“I’m going to refer broadly to the S&P 500, but let’s say on a forward-earnings basis, we came into the year about 21 times 12 months forward earnings. That’s gone to 16 or 17 times forward earnings so we’re back down in line with historical averages,” he said.

“I’d say that leg of the bear market is largely done. We’ve had the multiple compression effect. In terms of where we are, I think we’ve probably still got further to go because the next leg of this is probably about earnings and you’ve yet to really see the big period of earnings downgrades.”

Against this backdrop, FSA asked Ronald van Genderen, a senior manager research analyst at Morningstar, to select two equity funds for comparison. He chose the Allianz Global Equity Growth Fund and the Schroder ISF Global Sustainable Growth Fund.

Source: FE Fundinfo, Morningstar. (Data in US dollars, 27 October 2022)

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