HEAD-TO-HEAD: Fidelity versus MFS

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Mattias Möttölä, Morningstar

Introduction

Multi-asset products have gained popularity in most markets across Asia-Pacific.

Their AUM in the region increased at a five-year compound annual growth rate of 8.2%, taking the total to $726bn at the end of 2019, compared with $489bn at the start of 2015, according to a recent report by Broadridge Financial, a US-based data analytics and fintech firm.

The constant search for yield and steady income amid volatile market conditions has given mixed-asset funds a boost.

There are also several other reasons for their rising popularity.

These include their suitability for retirement savings, the gradual shift from commission-led to fee-based advisory models (shown by a trend towards discretionary fund management by private banks), the rising popularity of robo-advisors and feeder fund interest in mixed-asset strategies.

Nevertheless, mixed-asset funds struggle to match the long-term returns of equity funds and have to compete with high yield bonds funds to offer compelling levels of income.

For instance, mixed-asset funds (with international investment mandates) authorised for sale to Hong Kong retail investors, have achieved an average 9.04% cumulative return in the five years to 11 June, compared with a 22.28% average cumulative return by international equity funds and 13.97% by global high yield funds, according to FE Fundinfo data.

In terms of size, mixed-asset products now comprise 20% of long-term products available to investors in the region, behind single-asset equity and fixed income funds.

FSA asked Matias Möttölä, associate director at Morningstar, to compare two large international mixed asset funds: The Fidelity Global Multi Asset Income Fund and the MFS Meridian Global Total Return Fund.

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