HEAD-TO-HEAD: Fidelity versus Ninety One

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Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

The Fidelity fund has generated a three-year cumulative return of 43.54%, slightly outperforming the average return of international equity funds available to Hong Kong retail investors (42.91%), according to FE Fundinfo. Strong recent calendar years include 2020 and 2019.

The Fidelity fund’s manager Podger “tries to create a balanced portfolio that will perform well through a range of market conditions,” said Parekh

“This fund is based on a special situations approach, meaning there can be occasions when it underperforms, for example, if the market shuns companies undergoing corporate change such as in late 2018,” he said.

The Ninety One fund has posted a three-year cumulative return of 32.44%, FE Fundinfo date shows.

The process for the Ninety One strategy is likely to be less successful when equity markets are driven by macroeconomic concerns and more successful when earnings momentum is a strong indicator, such as in 2017, according to Parekh.

Parekh expects that most of any outperformance for both strategies should likely be driven by stock selection, “but Podger has typically adjusted and tilted the portfolio dependent on his macro views, more so than the Ninety One manager Mark Breedon.”

“Therefore, the Fidelity fund should outperform more consistently, although to a lesser degree if momentum is a driving factor in equity markets.”

Both funds have exhibited a higher volatility than the MSCI ACWI index, and the Ninety One fund has experienced greater fluctuations over the long-term, according to Parekh.

“This is within expectations given that strategies using quantitative models and those that focus on momentum can often exhibit higher volatility, especially around turning points in the market,” he said.

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars. *31 Dec 2020 – 8 July 2021

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