The FSA Spy market buzz – 19 April 2024
Doom and gloom on China, Peaks and troughs from First Sentier, Ninety-One looks at failure, Lombard Odier’s good news, Corporate jargon hell, Visit cheap Japan and much more.
HEAD-TO-HEAD: Fidelity versus Schroders
FSA compares two China equity products: the Fidelity China Focus Fund and the Schroder ISF China Opportunities Fund.
Germaine Share, Morningstar
Introduction
China’s equity markets have enjoyed a sharp recovery since the slump in mid-March amid justifiable fears that the Covid-19 pandemic would induce a severe contraction to the country’s economy.
The MSCI China index is up 19.55% year-to-date, and has surged 47% since its low on 19 March, according to FE Fundinfo.
Domestic investors have taken advantage of lower valuations and cheaper borrowing costs to drive the markets higher, while international funds have rationalised that China is recovering earliest and fastest from the economic consequences of coronavirus.
Technology stocks have been in the vanguard of the rally, buoyed by analysts’ predictions that ecommerce and online gaming habits acquired during lockdowns will persist and drive tech companies’ earnings higher.
In this unstable, confusing environment, Germaine Share, associate director at Morningstar, compared two large China equity funds, with very contrasting investment styles: the Fidelity China Focus Fund and the Schroder ISF China Opportunities Fund.
| Fidelity | Schroders | |
| Size | $2.89bn | $1.26bn |
| Inception | 2003 | 2006 |
| Managers | Jing Ning | Louisa Lo |
| Three-year cumulative return | -0.61% | 36.49% |
| Three-year annualised return | 0.88% | 10.70% |
| Three-year annualised alpha | -6.38 | 2.26 |
| Three-year annualised volatility | 21.22% | 21.80% |
| Three-year information ratio | -0.81 | 0.32 |
| Morningstar star rating | ** | **** |
| Morningstar analyst rating | Bronze | Gold |
| FE Crown fund rating | * | ** |
| OCF (clean share class) | 1.91% | 1.84% |
Source: FE Fundinfo, Morningstar (Data in US dollars, 4 September 2020)
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