HEAD-TO-HEAD: Blackrock versus Fidelity

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Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

The performance of both funds had been severely impacted when high yield bond prices plunged in the first quarter of 2020.

But the two products have since regained momentum and their performances were on an upward trajectory until the second half of 2021.

The Blackrock fund has outperformed both the sector and its Fidelity peer with a cumulative return of 8.66% over the last three years, compared with the sector average of 5.59%.

The fund has delivered consistent income since November, beating its category peers but lagging its category index, noted Morningstar.

The strategy’s tilt towards credit makes it more susceptible to losses during high-yield sell-offs, and had mixed results during other periods of market turbulence, it added.

The Fidelity fund, which is more exposed to fixed income securities, saw a three-year cumulative return of 1.94%, four percentage points less than the sector average.

Optimistic on the global economy, the Fidelity team dropped some of their equity hedges just before the February-March drawdown in 2020, which saw a 12.8% drop in return in the first quarter that year.

Woes worsened in 2021 when the fund’s Asia-heavy high yield portfolio did particularly poorly due to the Chinese property crisis, detracting 1.75% in a year while the global high-yield index had a positive return.

“Times have been tougher recently for the Fidelity fund which has seen its more cautious approach and Asia focus hurt its returns after the Covid crisis started compared with BlackRock,” said Mottola.

The two funds have similar volatilities, with the Blackrock fund at 8.71% and the Fidelity at 9.21%, according to FE Fundinfo.

Meanwhile, other funds that are categorised as “mixed asset” by FE Fundinfo have three-year volatilities ranging from 0.33% to as high as 20.46%.

In beta, or market risk, the Blackrock and Fidelity funds have had a 0.69 to 0.73 beta against the market, FE Fundinfo data shows.

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars. *1 Jan 2022 – 28 Apr 2022

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