HEAD-TO-HEAD: Fidelity versus UBS

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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 6.95%, according to FE Fundinfo, compared with 12.01% for the average Asia Pacific product available to Hong Kong retail investors. The UBS fund has posted a 4.15% three-year cumulative return.

The volatilities of the Fidelity and UBS funds during the same period were 10.14% and 9.65%, respectively, FE Fundinfo data shows.

Looking at the Fidelity fund, Ge pointed out that the strategy’s long track record dating back to 2007 is less relevant considering previous manager Bryan Collins’ departure and the introduction of two new decision-makers in July 2020.

“However, since Tae Ho Ryu and Terrence Pang took the helm, the strategy’s clean share class outperformed its category benchmark JPM ACI Non-Investment Grade Index by 390 basis points and outpaced 84% of category rivals.”

The portfolio lost 15.25% during 2020’s first-quarter market sell-off, hurt by its overweight in higher-yielding debt as credit spreads widened significantly in March.

“But, the team’s decision to add risk in the ensuing months, which was fuelled by attractive valuations and their optimism around vaccine news, proved to be additive as the market rallied strongly.”

At the UBS fun, manager “Ross Dilkes has delivered solid absolute and peer-relative returns,” said Ge.

Thanks to the team’s risk[1]conscious approach, which looks to equilibrate credit risk with duration and foreign exchange calls, return volatility (as measured by standard deviation), down-market capture, and drawdowns have consistently clocked in lower against the peer median over the trailing one-, three-, and five-year periods, according to Ge

Sector allocation and security section has added value, partially offset by the team’s duration and yield-curve management calls. Nevertheless, the portfolio did better than 77% of peers during the pandemic-induced March sell-off.

The Fidelity fund’s managers raised cash levels this year in response to outflows of $263m in the six months to the end of September, prompted by investors’ concerns about the China property sector. In contrast, the UBS fund has enjoyed inflows, noted Ge, as global investors continue to seek income.

Discrete calendar year performance

Source: FE Fundinfo. Returns in US dollars. *31 Dec 2020 – 8 Oct 2021

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