HEAD-TO-HEAD: Fidelity versus Mirae Asset

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The Fidelity and Mirae Asset funds versus their benchmark index, the MSCI AC Asia ex Japan Index. Source: FE. In US dollars

Performance

Daniels expects both funds to outperform the market during growth rallies, as both funds have a bias towards growth stocks.

On the other hand, both products are expected to underperform during value-oriented rallies, such as in 2016.

“They could also underperform in momentum- or low quality-driven rallies,” he said.

Daniels noted, however, that the Mirae fund had outsized underperformance vs its benchmark in 2018.

Discreet annual calendar performance

Source: FE. In US dollars

“The product is exposed to the Asian consumer story, and in 2018, a lot of those consumer discretionary names declined.

“That is one of the risks in this strategy. It kind of played into everything that went wrong, especially after the US and China trade war escalated during the middle part of the year that really hurt some of the higher growth consumer discretionary names, which had actually done very well in 2017.”

In terms of volatility, Daniels said that the Mirae fund is more volatile than the Fidelity offering.

“I would expect the Mirae strategy to be more volatile as it is slightly more concentrated than the Fidelity option. In addition, the nature of the companies that the fund buys into can be a bit more volatile.”

Three-year annualised volatility

Source: FE

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