HEAD-TO-HEAD: Barings vs JP Morgan

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Investment process

Both the Barings and JP Morgan funds invest in Asia ex-Japan equity markets. The funds are similar in terms of their investment processes, with both having a focus on quality growth stocks, according to Ng.

The funds look at the long-term growth prospects of companies and prefer those that could grow earnings over a five-year period, he added. Both managers prefer companies with strong business models, which include industry leaders or companies they expect to gain market share in the long-term.

The funds are concentrated relative to their peers. The Barings fund has 60 positions and the JP Morgan product has 43.

Holdings also deviate from the benchmark index, the MSCI Asia ex-Japan. Both products have an active share of 70% relative to the benchmark, Ng added.

There are slight differences, Ng said. The Barings fund manager is the more valuation-conscious of the two.

Although the Barings fund has a growth tilt, it follows a growth-at-a-reasonable-price philosophy, which makes its valuations slightly lower than the JP Morgan fund, according to Ng.

“In relative terms, the valuations (price-to-earnings and price-to-book ratios) of the JP Morgan fund are slightly higher than the Barings fund. The JP Morgan fund is willing pay a higher premium to get into the stocks that present long-term opportunities,” he said.

Ng added that although sector exposure is similar for both funds, a key difference is JP Morgan’s higher exposure to the financial sector.

“Although financials are traditionally cyclical stocks, the JP Morgan fund has a strong focus on Chinese insurers, which the fund managers believe is a high growth area on the back of the rapidly rising middle class.”

The Barings fund, by comparison, has the second largest allocation to the financial sector, Ng said, noting that both portfolios hold privately-owned banks in India.

He explained that managers of both funds believe that the sector is a high growth area because there are still a lot of individuals in India who have no savings account.

“These private banks are also building up fintech technology to gain more clients,” he said.

Sector allocations (%)

Source: Fund factsheets

Country allocations (%)

Source: Fund factsheets

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