HEAD-TO-HEAD: Blackrock vs HSBC

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Conclusion

The Blackrock fund receives a Morningstar analyst rating of Bronze and a four-star rating, while the HSBC fund receives a Neutral analyst rating and a four-star rating.

Morningstar’s analyst rating is a forward-looking analysis of a fund, while the star rating looks at historical risk-adjusted performance.

Based on Morningstar’s analyst rating, Yew said that the firm clearly prefers the Blackrock fund.

Yew explained that the Blackrock fund is active in terms of taking risk and is not afraid to deviate from its benchmark index. “That is something that we like to see from active managers.”

Turning to the HSBC fund, he noted that it does have lower volatility than the Blackrock fund. Additionally, if the US dollar is on a strengthening trend as some believe, the HSBC product could outperform the Blackrock fund and the sector.

However, Yew emphasised that the HSBC fund does not take enough active risk and tends to be close to the benchmark while fees are higher than the sector average, and these factors weigh strongly on his conclusion to choose Blackrock’s product.

“For the HSBC Asian Bond fund, if you are going to just follow the benchmark, then there might be a case to instead invest in lower cost ETFs,” he said.

“If you are expected to pay fees for active management, then we want to see the manager take more active risk in order to justify the fees that they are charging investors.”

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