HEAD-TO-HEAD: Fidelity versus First State

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

PERFORMANCE

Both funds have generated strong long-term returns and have comfortably out-performed their sector average and their benchmark.

The Fidelity Asia Focus Fund has done especially well over the one-, three- and five-year periods, according to Poole.

It has a cumulative three-year return of 25%, compared with just 11.58% for the average fund in its category available to Hong Kong and Singapore retail investors, and its alpha during that period is 4.04, according to FE Fundinfo data.

“Stock selection is a major contribution to its performance, and the fund has demonstrated an ability to excel during bull markets,” said Poole.

The fund’s best recent calendar year in absolute terms was 2017, when it rose 41.76%, but its most impressive relative performance was 2019, when the fund was up 24.05% compared with a 18.17% return by the MSCI AC Asia ex-Japan index.

However, the fund also tends to capture more of its benchmark’s downside in bear markets, Poole pointed out, which was the case in 2018, and returns can fluctuate as indicated by annualised volatility of 19.31%.

The First State Asian Equity Plus Fund has also been a strong performer over the long-term, which – as with the Fidelity product – reflects the strategic perspective of the managers.

The funds’ three-year cumulative return is 23.84%, and its best recent calendar years were 2017 (36.82%) and 2019 (18.62%).

The performance doesn’t quite match the returns of the Fidelity product, but the fund is more stable, with an annualised volatility of 16.14%. Its information ratio (a measure of risk-adjusted returns) is better too at 0.84, compared with 0.72 for the Fidelity fund.

“Stock selection is key to the First State’s strategy’s success, and careful risk awareness and management reduces volatility,” said Poole.

However, its exposure to the consumer sector, suffering from the coronavirus induced lockdowns, has dampened returns this year, he noted.

Discrete annual performance

Source: FE Fundinfo. Annual returns in US dollars. *to 20 August 2020

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