Posted inHead To Head

HEAD-TO-HEAD: Fidelity versus First State

FSA compares two Greater China equity funds: the Fidelity Greater China Fund and the First State Greater China Fund.
by Francis Nikolai Acosta

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The Fidelity and First State funds versus their benchmark, the MSCI Golden Dragon Index, according to FE data.

Performance

The alpha source for both funds is mainly from stock selection. Both managers have demonstrated consistent good performance, according to Share.

However, Share believes that the Fidelity fund has more potential to capture the upside when Greater China markets are rallying.

“I would expect the First State fund to lag [during market rallies] because they are not really into sexy, hot momentum-driven stocks,” Share said.

But the First State product is more downside resilient when markets are down, given its focus on quality, she noted.

“You would expect it to do well in market conditions like this year, which has been a down market.”

Discrete annual performance (%)

Fund / benchmark

YTD 2018

 2017 2016 2015 2014 2013

2012
Fidelity Greater China Fund

-12.45

 48.12 4.60 -3.48 6.79 14.16

23.12
First State Greater China Growth Fund

-10.30

 49.88 1.88 -3.24 4.09 12.00

20.40
Index : MSCI Golden Dragon

-11.01

 44.19 5.75 -7.12 8.06 7.25

22.65
Source: FE Analytics

In terms of volatility, Share said she would typically expect the Fidelity fund to be less volatile than First State’s product because it is more diversified and more benchmark-aware.

However, it is different in this case. Given that the First State fund is more quality-focused, it has been the less volatile of the two.

“The First State fund has consistently had a lower standard deviation over the three-, five-, and 10-year periods,” Share said.

Three-year annualised volatility*

Fund / Index

Volatility
Fidelity Greater China Fund

18.34
First State Greater China Growth

18.1
Index: MSCI Golden Dragon

17.96
Source: FE Analytics
*28 Nov 2015 – 23 Nov 2018

 

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