HEAD-TO-HEAD: Capital Group versus Nomura

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Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

Both funds have produced strong cumulative returns during the past five years, with Capital Group generating 92.00% and Nomura posting 73.66%, in US dollar terms, compared with 51.88% by the international equity sector average and 76.19% by their benchmark MSCI ACWI, according to FE Fundinfo.

Over three years, the Capital Group has returned 56.84% and Nomura has returned 38.81%, compared with 33.55% and 48.36% by the sector and index, respectively, FE Fundinfo data shows. The Capital Group strategy has been more volatile (21.44%) over the period  versus 18.94% for the Nomura product, which is close to the sector average.

“The Capital Group fund has produced positive returns in four of the past five full calendar years (2017 to 2021 inclusive), the strongest of which came in 2020 (32.01%), while the only year the fund lost money for investors was in 2018 (-7.0%),” noted McDermott.

The Nomura Global High Conviction fund launched in February 2017 and has only once failed to produce a positive return in a calendar year (2018: -8.26%. The fund produced its strongest return in 2019 (35.31%).

However, year-to-date, both strategies have struggled. The Capital Group fund has dropped 10.96% and the Nomura fund has fallen 10.46%, compared with -9.37% by their peers and -6.49% by their benchmark, according to FE Fundinfo

“Both are high conviction vehicles, driven by stock selection, but they achieve their goals in different ways,” said McDermott.

“The Capital Group fund holds positions from across the entire investment spectrum. However, due to the requirement for minimum company size, as well as strategy focusing on growing companies, the fund will have a general tilt towards large-cap growth firms. Naturally when these perform it will create a tailwind for the portfolio,” he said

“The Nomura fund is incredibly high conviction, but does target companies which are trading at a discount to intrinsic value. This should aid the portfolio in periods where quality and value biases come to the fore,” he said.

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