Head To Head

HEAD-TO-HEAD: Blackrock vs UBS AM

FSA compares the BGF China Fund and the UBS (Lux) China Opportunity Fund.

by Francis Nikolai Acosta 27 July 201810 November 2020

Germaine Share, Morningstar

Chinese equities have generally been out of favour recently as investors hold concerns about slowing GDP growth, rising credit default rates and trade tensions with the US.

“GDP has slowed down a little bit over the past few years and investors have been allocating more toward the developed markets,” said Germaine Share, Hong Kong-based associate director for manager research at Morningstar.

According to FE data, the MSCI China Index underperformed the broader emerging market index in 2016.

However, beginning in 2017, performance turned, with the China index beating the EM index:

Discreet annual calendar performance

	2018	2017	2016	2015
MSCI Emerging Markets	-4.24	37.75	11.6	-14.6
MSCI China	-1.87	54.33	1.11	-7.72

Source: FE Analytics

Share expects that 2018 will be a better environment for Chinese equities compared to last year.

“The source of growth for 2017 was concentrated in Tencent and Alibaba, and to some extent, Ping An Insurance.

“This year, we are seeing sources of alpha from a range of different sectors, so it will be a better environment for bottom-up stock pickers.”

Against this backdrop, FSA asked Share to look at two China equity funds, the BGF China Fund and the UBS (Lux) China Opportunity Fund.

	BGF China Fund	UBS China Opportunity Fund
Size	$1.5bn	$6.5bn
Inception	June 2008	Nov 1996
Manager	Helen Zhu	Bin Shi
Three-year annualised return	5.79%	15.96%
Three-year annualised alpha	6.23	16.23
Three-year volatility	20.95	19.42
Morningstar analyst rating	Neutral	Bronze
Morningstar star rating	****	*****
FE Crown fund rating	**	*****
OCF	1.84%	2.39%

Source: FE Analytics, Morningstar

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