HEAD-TO-HEAD: Barings versus Fidelity

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Investment process

Both the Barings and Fidelity products invest in Asean equities and employ a bottom-up approach. They also have the same benchmark index, the MSCI Asean Index.

However, both funds are different in terms of their investment strategy, according to Ng.

The Barings fund manager, Lim Soo Hai, has a growth-at-a-reasonable-price (GARP) investment strategy, Ng said.

“He tries to find companies with unrecognised growth, or where he believes that the earnings growth prospect for the company is better than what the consensus says.

“Basically, it is about identifying quality companies with growth potential that is underestimated by the market.”

The Barings manager focuses on long-term growth potential and competitive positioning of companies, Ng said, adding that Lim prefers companies that have innovative ideas and at the same time are able to generate excess cash.

Turning to the Fidelity fund, manager Madeleine Kuang, invests in three different categories of companies: “core-compounders”, which account for 40% of the portfolio, “future winners” (40% of the portfolio) and mispriced stocks (20%), Ng said.

Core-compounders are companies that typically already have a strong position in the industries they operate in, future winners are those that have potential to be leaders, while mispriced stocks are companies that have relatively low valuations, which tend to be cyclical names, Ng explained.

Ng noted that Kuang took over the fund last year and her strategy is different from her predecessor, Gillian Kwek, who decided to retire from the industry. Unlike Kwek, Kuang is more willing to take off-benchmark bets, as opposed to Kwek’s strategy of having a similar exposure to the index but taking overweight and underweight bets of stocks she believes will out or underperform, Ng said.

Another key difference between the two funds is that the Barings fund is more concentrated with around 60 stocks, while the Fidelity product is more diversified with 100 names. Ng noted that the Fidelity product has always been diversified, even with the previous fund manager.

The differences in investment approach are reflected in their country allocations. For example, The Barings fund has a 6.5% exposure in Vietnam, while the Fidelity fund only has 0.8%. Another key difference is Indonesia. While both are overweight the index, the Fidelity fund has nearly 30% of its assets in the country, which compares to just 25% in the Barings fund.

Market exposure

Source: Fund factsheets.

Sector exposure

Source: Morningstar Direct

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