HEAD-TO-HEAD: Fidelity versus Templeton

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

Performance

The Fidelity fund has generated a -2.16% three-year cumulative return, in US dollars, according to FE Fundinfo, compared with its benchmark JP Morgan EMBI Global Diversified Index (-0.54%), and its sector average (-2.16%).

Its annualised volatility of 13.07% during the same period is lower than its benchmark index (10.63%) as well as its sector average (9.98%).

The Templeton fund has generated a -18.26% three-year cumulative return, in US dollars, according to FE Fundinfo, compared with its benchmark JP Morgan EMBI Global TR (1.98%) and its sector average (-2.16%).

Its annualised volatility of 7.82% during the same period is lower than its benchmark index (10.02%) as well as its peer average (9.98%).

When looking at the historical volatility of both funds prior to February of 2020, the Templeton fund had displayed a high volatility versus the Fidelity fund, Ge said.

“I think that is because they are being a bit more benchmark agnostic, high conviction based. But after March of 2020, we actually saw the volatility profile reverse.”

The Fidelity fund has been more volatile since the March 2020 selloff. Ge thinks part of the reason for that is because it was quite aggressive in terms of “styling up its credit risk”, after the March selloff to capitalise on the recovery, so that increased its risk profile.

In contrast, the Templeton fund was more reserved in terms of its risk taking after March 2020. The managers kept its risk profile rather low for the remainder of 2020 and only started to add at the end of 2020, once the news of positive use of vaccines came out.

Going forward, Ge said that he would expect the Templeton fund to be more volatile, because of its history of making larger bets.

Discrete calendar year performance

Source: FE Fundinfo and fund factsheets. Annual returns in US dollars. *31 Dec 2021 – 7 Mar 2022

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