HEAD-TO-HEAD: Fidelity versus Mirae Asset

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Investment process

Both the Fidelity and Mirae products invest in Asia (ex-Japan) equities. While both funds tend to invest in quality growth companies, their processes are different, according to Daniels.

The Fidelity fund’s manager prefers companies with, in his view, have quality management and reasonable valuations. He also looks at companies with an economic moat – meaning they benefit from an industry with high barriers to entry or have buyer or supplier power.

“The stocks that are in the portfolio are already good businesses that demonstrate those characteristics. The manager also likes companies that have turnaround stories, although he should [be solidly convinced] about the new management team,” Daniels said.

Daniels noted that the fund’s manager, Dhananjay Phadnis, cut the number of holdings in the fund to 60-80 from 150-200 when he became manager in 2015.

“Now it’s really more about the best ideas when compared to the previous portfolio.”

Turning to the Mirae strategy, Daniels said that although the fund also employs a bottom-up investment process, it has a more thematic orientation.

“A lot of their positions do generally sit around investment themes, so that could be healthcare, access to financial resources and credit and other technology-oriented services that have a big effect in Asia.

“So ultimately, each holding the fund has should benefit from the rising influence of the Asian consumer.”

The product is also more concentrated than the Fidelity fund, with only 40-50 names, he added.

The differences in both funds’ investment processes are reflected in their sector allocations. For example, the Mirae product has a huge allocation to healthcare compared to the Fidelity fund and to its peers.

Sector allocation (%)

Source: Morningstar

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