HEAD-TO-HEAD: Blackrock vs UBS AM

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The Blackrock and UBS AM funds versus their benchmark index, the MSCI China 10/40 Index.

Performance

Given Blackrock’s value tilt, the fund has underperformed the MSCI China 10/40 Index, as growth stocks have outperformed value stocks since last year, according to Share.

“High momentum growth stocks outperformed better in 2017 and that’s why you see that massive underperformance,” Share said.

But the fund did well in 2016 when value stocks were in favour, Share noted, adding that it was able to capitalise on the supply side reform themes, which the government rolled out aiming to make industries more efficient.

“It was the energy and material sectors that did very well on the back of the reforms,” she said.

Discreet annual calendar performance

Source: FE Analytics

The story is reversed for the UBS AM fund. 2016 was not a good year for the fund as value stocks rallied, Share explained, adding that the fund was underweight in the energy and material sectors.

However, the fund recovered in 2017, a period that was favourable to the fund’s investment style.

“Shi’s performance in 2017 is particularly impressive given that Tencent and Alibaba were stocks that did the best last year and he was limited to investing at most 10% in these stocks,” she added.

In terms of volatility, Share believes that the Blackrock fund has the potential to be more volatile than the UBS AM fund long-term because it rotates in different styles.

Three-year annualised volatility

Source: FE Analytics

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