HEAD-TO-HEAD: Blackrock vs First State

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Data: FE Analytics, in US dollar terms.

Performance

The Blackrock fund outperforms the First State fund and category average on a three- and five-year basis.

The Blackrock fund’s outperformance comes with volatility. Measured by standard deviation, the product is more volatile than the First State fund, category average and index on a three-year basis.

With Swan’s macro overlay and quantitative screening, there is no single market environment which is more favourable to the fund.

“The outperformance can be through an entire market cycle but heavily depending on whether Swan can consistently get different market inflection points correct,” said Daniels.

Three-year standard deviation

Source: Morningstar

As the First State team invests mainly in quality companies led by conservative management, the portfolio tends to perform better in choppy market environment and lag in a strong market rally.

Daniels pointed to the example of its performance from 2017.

Because of valuation reasons and corporate governance concerns, the fund did not own some mega-cap rally drivers, including social media operator Tencent and Korean electronics-maker Samsung. The fund struggles to beat the benchmark and peer funds as a result, he added.

Moreover, solid performing Indian bank holdings, such as Kotak Mahindra Bank and HDFC Bank, drive its year-to-date performance in 2018, he added.

Performance (%)

Data: FE, in US dollars.

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