Head To Head

HEAD-TO-HEAD: Blackrock versus First State

FSA compares two Asian fixed income funds: the Blackrock GF Asian Tiger Bond Fund and the First State Asian Bond Fund.

by Francis Nikolai Acosta 7 December 201811 October 2022

Introduction

With most markets down this year, and rising interest rates plus the US-China trade war compounding investors’ concerns, a number of fund managers are expecting the uncertainty in the markets to continue in 2019. As a result, they are positioning their portfolios defensively.

T Rowe Price, for example, now prefers fixed income as it expects more downside risk for global equity markets. Pinebridge Investments, meanwhile, has also de-risked some of its portfolios, with US Treasuries replacing high-yield and some equities.

Within the fixed income space, Luke Ng, vice president at FE Advisory Asia, believes Asian bonds are fundamentally resilient over the long term when compared with debt in Europe and Latin America.

“Relative to other markets, inflation is at a moderate level and current accounts across Asia are actually healthy,” he said.

Valuations for both Asian investment grade and high-yield bonds are also attractive when compared with their global counterparts, he added.

Ng noted that demand for Asia fixed income has risen, especially from locally-based institutional managers.

“The demand in the region, especially from the institutional side, has been strong, and since these institutions hold assets longerterm, volatility has been relatively low and stable.”

Against this backdrop, FSA asked Ng to compare two Asia fixed income funds: the Blackrock GF Tiger Asian Bond Fund and the First State Asian Bond Fund.

	Blackrock	First State
Size (fund level)	$2.26bn	$33.9m
Inception	1996	2003
Manager	Neeraj Seth, Artur Piasecki and Ronie Ganguly	Nigel Foo
Three-year cumulative return*	6.56%	4.68%
Three-year annualised return*	2.00%	1.41%
Three-year annualised alpha*	0.4	0.08
Three-year annualised volatility*	3.1	2.56
Morningstar analyst rating	Bronze	–
Morningstar star rating	****	–
FE Crown fund rating	**	**
OCF (retail share class)	1.22%	1.26%

Source: FE Analytics

*05 December 2015 – 30 November 2018

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