HEAD-TO-HEAD: Blackrock versus Capital Group

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Matias Möttölä, Morningstar

INTRODUCTION

Investors’ desire for yield and a steady income in an environment of low interest rates, while retaining exposure to rampant equity growth stocks, has given mixed-asset funds a boost. However, they still struggle to match the long-term returns of equity funds and have to compete with high yield bonds funds to offer compelling levels of income.

For instance, mixed-asset funds (with international investment mandates) authorised for sale to Hong Kong retail investors, have achieved an average 46.1% cumulative return during the five years to 26 February, according to FE Fundinfo. But, much of the performance has been attributable to the surge in risk asset prices after the first quarter of 2020.

In the five years up to 31 December 2019, the sector could only muster a 17.42% return, underperformed global high yield bond funds, which posted an average 21.48%.

Meanwhile, international equity funds averaged 35.12% during that period, and a heady 83% in the last five years, FE Fundinfo data shows.

Yet, mixed asset funds clearly have a position in portfolios, provided investors with exposure to a balance of risk assets to gain capital appreciation, and stability to preserve their principal and earn reliable income.

Against this background, FSA asked Matias Möttölä, associate director at Morningstar, to select two international mixed-asset funds for comparison. He chose: the the Blackrock Global Multi-Asset Income Fund and the Capital Group Global Allocation Fund.

Source: FE Fundinfo, Morningstar. (Data in US dollars, 26 February 2021)

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