HEAD-TO-HEAD: Blackrock vs Schroders

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Source: FE. Brent crude oil is included as a proxy for oil prices. All data is converted into US dollars for comparison purposes. Category average is calculated based on 13 funds available for sale to retail investors in Hong Kong and Singapore.

Performance

The Blackrock fund has outperformed the Schroders fund on a three-year and five-year basis.

As mentioned earlier, because of strong exposure to exploration and production companies, the Blackrock and Schroders funds are more sensitive to oil price volatility. The slump in oil prices from 2014 to 2015 resulted in a substantial underperformance compared to the peer group, Ng said.

However, due to the strong exposure, during a substantial pick-up in oil prices they tend to perform better than peers. He noted that the Schroders fund would have obvious outperformance due to the more aggressive overweight.

That said, the rise of oil prices in 2017 resulted in under-performance of both funds. Ng attributed the poor performance to a growth stock-driven rally in 2017.

“Last year, the market was mainly driven by growth and momentum stocks, such as technology companies. But the energy stocks were unloved despite improving corporate earnings,” he said.

If oil prices remain resilient, he expects increasing profitability for petroleum-linked companies will soon be reflected in their stock prices. In this scenario, the Schroders fund would likely outperform the Blackrock fund, Ng said.

The Schroders fund has historically been more volatile than the Blackrock fund. According to FE, three-year volatility of the Blackrock product is 21.5%, compared with Schroders (33%) and Brent crude oil (33%).

Performance (calendar year)

Source: FE. Brent crude oil is included as a proxy for oil prices. All data is converted into US dollars for comparison purposes. Category average is calculated based on 13 funds available for sale to retail investors in Hong Kong and Singapore.

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