HEAD-TO-HEAD: Axa versus Fidelity

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Ronald Van Genderen, Morningstar

Introduction

The global real estate market has had a strong year.

Year-to-date, the FTSE EPRA Nareit Developed Index performed 20.53%, which is close to the MSCI AC World’s 21.58% performance, according to data from FE Analytics.

“It has been a pretty strong year for global property funds, and this was mainly driven by US real estate stocks,” Ronald Van Genderen, analyst for manager research at Morningstar, told FSA.

Although property stocks have rallied, Van Genderen noted that on average, global property funds have not outperformed sector benchmarks.

“There aren’t many actively-managed global property funds that are able to beat the benchmark. It appears to be a very difficult market for active managers.”

Year-to-date, real estate funds sold in Hong Kong on average had a return of 17.09%, which is lower compared to the FTSE EPRA Nareit Developed Index’s 20.53%.

Van Genderen believes that one of the reasons for the underperformance of real estate funds is the high fees.

“Typically, actively-managed global real estate funds are more expensive than global equity funds, which makes it harder to beat the benchmark.”

Against this backdrop, FSA asked Van Genderen to compare two global real estate products: the Axa Framlington Global Real Estate Securities Fund and the Fidelity Global Property Fund.

Source: Morningstar Direct, FE Analytics

*11 November 2016 – 13 November 2019

**12 November 2016 – 08 November 2019

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