HEAD-TO-HEAD: Fidelity versus JP Morgan

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Investment approach

Both funds are similar in terms of sector allocation and investment style as they prefer investing in quality companies that have strong balance sheets, solid fundamentals and consistent earnings, Liu said.

The JP Morgan fund has a growth bias to its investment approach and categorise companies on their stock list into premium quality trading names and structurally challenged names.

She noted that by the end of March, around 91% of the fund’s assets were invested in premium and quality companies, while only a small proportion of the assets were allocated to riskier companies.

On the other hand, the Fidelity fund has a blended style in its asset allocation. The fund focuses on identifying companies with sustainably strong balance sheets and does not have a tilt towards growth or value stocks.

“That is reflected in down markets, as the fund has a better downside capture ratio compared to the index and also its peers. It held up pretty well in previous down markets due to its quality bias,” Liu said.

“The Fidelity fund has a standard approach, where they look for strong, sustainable returns on equity, good balance sheets and reasonable variations.”

In terms of geographical allocation, both funds have sizeable exposures to China, India and Taiwan. The Fidelity fund has 53.1% invested in these three economies, while the JP Morgan fund has 61.8%.

The sector allocations for both funds are similar, with the top four sectors being financials, information technology, consumer discretionary and consumer staples for both funds.

The two funds also share similarities in top holdings. Fidelity holds 8% in HDFC Bank, while the JP Morgan fund holds 4.4% in the Indian bank.

JP Morgan invests 8.7% of its fund’s AUM in Taiwan Semiconductor, while it is Fidelity’s second largest holding with 6.2%.

One difference noted by Liu between the two funds is that the Fidelity fund invests around 6.4% of its AUM in cash, while the JP Morgan fund is almost fully invested even in such a volatile period.

Fund characteristics

Sector allocation:

Source: Fund factsheets, 30 September 2022

Top 5 holdings:

Source: Fund factsheets, 30 September 2022

Country allocation:

Source: Fund factsheets, 30 September 2022

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