Head To Head

HEAD-TO-HEAD: Blackrock versus Fidelity

FSA compares two global financial equity products: the BGF World Financials Fund and the Fidelity Global Financial Services Fund.

by Francis Nikolai Acosta 31 January 202010 November 2020

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The Blackrock and Fidelity funds versus their index and sector in Hong Kong. Source: FE Fundinfo. In US dollars.

Performance

Meakin expects that the Blackrock fund’s performance is more volatile compared with its benchmark, the MSCI ACWI/Financials Index, while the Fidelity product’s volatility should be in line with the index.

Three-year annualised volatility

Fund / Index	Volatility	Sharpe
Blackrock	16.25	0.55
Fidelity	13.47	0.85
MSCI ACWI/Financials	13.27	–
HKM Equity – Financial	13.56	–

Source: FE Fundinfo. Period: 28 January 2017 – 24 January 2020

Meakin attributed the Blackrock fund’s higher volatility to the focus on valuations, coupled with a concentrated portfolio.

“Value as a style has the potential to invoke greater volatility,” he said.

However, he believes that the Blackrock fund has a higher upside capture compared with its peers, which means it can potentially outperform the market during market rallies.

Turning to the Fidelity fund, Meakin said that its focus on quality has helped to keep volatility in line with the index while providing better downside protection than the Blackrock fund.

“The tilt toward quality may help the fund hold up better than the index or its peer group in difficult market conditions,” he said.

But the Fidelity product may lag the peer group during market rallies, he added.

Discreet annual calendar performance

Fund / index / sector	YTD 2020	2019	2018	2017	2016	2015	2014
Blackrock fund	-3.51	32.48	-15.52	32.21	6.47	-7.63	0.83
Fidelity fund	-1.32	23.42	-15.99	24.42	5.09	1.72	3.69
MSCI ACWI/Financials	-2.12	24.07	-15.16	24.75	13.06	-5.11	3.93
HKM Equity – Financial	-2.14	24.95	-14.92	27.66	-1.27	-6.53	24.76

Source: FE Analytics. In US dollars.

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