HEAD-TO-HEAD: Capital Group versus T Rowe Price

123456

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

PERFORMANCE

The Capital Group fund has delivered strong long-term results.

It has generated a three-year cumulative return of 31.14%, which is better than its sector average (14.98%) and the MSCI Emerging Markets index (22.10%), according to FE Fundinfo.

After underperforming the index in 2017, when its exposure to non-emerging market stocks counted against it, the fund has outperformed every calendar year since then – although it has had a weak start to 2021, FE Fundinfo data shows.

“It can lag in emerging-markets rallies, and that was most evident in the mostly uninterrupted emerging-markets bull market that began in the early 2000s and lasted until the 2007-09 global financial crisis,” said Caquineau.

However, its more conservative approach means that the fund has been more stable, with annualised volatility of 19.30% during the past three years, compared with 19.63% for the index.

“The strategy fares even better on a risk-adjusted basis thanks to muted volatility and superior downside protection,” said Caquineau.

As a pure emerging market equity play, the T Rowe Price fund is less stable, and has annualised volatility during the same period of 19.87%, according to FE Fundinfo.

Its three-year cumulative return is 19.37%, significantly inferior to the Capital Group fund’s performance.

It had a superb 2017, posting 41.60%, but subsequent calendar year returns have been less impressive, FE Fundinfo data shows.

Gonzalo Pangaro has built a strong track record since he took over the strategy in 2009, generating an annualised return of 11.7%, according to Caquineau.

Since his arrival, the fund has outperformed in various market conditions, particularly in market rallies.

Security selection has been robust in Asia, particularly in Greater China, which has been the largest contributor to performance since January 2016

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars. *31 Dec 2020 – 12 March 2021

123456