Performance
The BNY Mellon fund slightly underperformed the broader market on a three-year cumulative return basis, while the Deutsche product significantly underperformed the market, according to Allfunds data.
The dividend yield of the BNY Mellon fund is 2.74%, while the Deutsche fund’s dividend yield is 3.5%.
However, the volatility of both funds is lower than the broader market. The maximum drawdown for each product during the three-year period is also lower than the market.
The BNY Mellon fund weathered market turmoil well during the first half of 2016, but lagged the value rally in the second half of 2016, Durmaz said.
The Deutsche fund’s huge overweight to European equities and underweight to the US has been the key reason for the relative underperformance to the broader market, Durmaz added.
Top five country allocations:
| BNY Mellon fund | Deutsche fund | ||
| US |
44.0% |
US |
34.9% |
| UK |
20.2% |
Germany |
8.7% |
| Switzerland |
10.5% |
Switzerland |
7.4% |
| Netherlands |
5.9% |
Japan |
6.8% |
| France |
5.9% |
UK |
6.4% |
Source: BNY Mellon, Deutsche Asset Management
Hinton added that both funds perform better than the MSCI World in a down market, while they underperform when the global markets are more driven by sentiment rather than earnings. An example of markets driven by sentiment was the second half of 2016, when there were wide expectations of reflation after the election of Donald Trump. Hinton said at the time, cyclical stocks tended to outperform quality stocks.
