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HEAD-TO-HEAD: China Merchants versus Penghua
FSA compares two China onshore fixed income products: the CMF Industrial Bond A Fund and the Penghua Industrial Bond Fund.
Performance
The two funds have consistently outperformed their peers, and have generated similar returns to each other over one-, three- and five-year periods, according to Wu.
“However, as the CMF fund has a shorter duration and higher yields, it tends to outperform the Penghua fund in downward or volatile markets,” she said. In 2016, for example, the CMF fund posted a calendar year return of 4.17% while the Penghua fund only returned 0.79%.
On the other hand, “given the Penghua fund invest more in convertibles, it is expected to outperform the CMF fund when Chinese equities rally strongly,” said Wu. For instance, in 2019 the Penghua fund achieved a calendar year return of 9.79%, compared with just a 6.71% return by the CMF fund.
“Of course, the Penghua fund is also more volatile given its larger exposure to convertibles and its more active rates strategy,” said Wu.
Cumulative performance
| 1 year | 3 years | 5 years | |
| CMF | 5.01% | 6.42% | 5.49% |
| +/- Category | 1.59% | 1.81% | 1.92% |
| Penghua | 4.40% | 6.91% | 5.39% |
| +/- Category | 0.98% | 2.30% | 1.825 |
Source: Morningstar, 30 June 2021.
Discreet annual calendar performance
| YTD 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | |
| CMF | 3.22% | 4.17% | 6.71% | 8.64% | 3.02% | 4.17% |
| +/- Category | 1.40% | 0.11% | 1.44% | 3.30% | 1.46% | 3.08% |
| Penghua | 2.76% | 4.34% | 9.79% | 7.76% | 2.98% | 0.79% |
| +/- Category | 0.94% | 0.28% | 4.52% | 2.42% | 1.42% | -0.30% |
Source: Morningstar, 30 June 2021.
Three-year risk measures
| Fund / Index | Standard deviation | Sharpe ratio |
| CMF | 1.49 | 3.46 |
| Penghua | 2.59 | 2.18 |
| Category | 2.51 | 1.51 |
Source: Morningstar, 30 June 2021.
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