HEAD-TO-HEAD: Fidelity vs JP Morgan

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Investment strategy

Recently, both the Fidelity and JP Morgan funds have had changes to their portfolio management teams.

Ng believes there will be some impact on the overall investment process for the Fidelity fund after the departure of the sole manager, Gillian Kwek.

“At Fidelity, the research team makes recommendations for managers while the portfolio manager also contributes ideas. The manager’s ideas usually come from company visits and internal and external research. It is expected the fund will continue to adopt such a broad process.”

Kwek aimed to position the fund closer to the designated benchmark, the Bangkok SET Capped Index.

“The previous manager Kwek took a more neutral position to the benchmark with top ten holdings similar to the index. The large-cap stocks dominated the portfolio and rarely the fund would hold off-benchmark bets,” Ng said.

However, Madeleine Kuang, the new manager, emphasises the stock valuation and tends to hold more active money.

Therefore, investors should expect more active share in the portfolio under her management.

“The new manager also looks into the stocks that are not widely covered by sell-side research. Moreover, she spends time identifying underpriced companies and potential future market leaders.”

The fund reduced holdings to 39 in June from 47 a month earlier. Ng explained that the reduction in holdings could be due to bottom-up selection with strong emphasis on valuations. The current major overweight positions are consumer staples, financials and real estate.

Turning to the JP Morgan fund, Ng said the management change does not impact the typical stock selection process used by the whole firm.

“The JP Morgan team will invest under the same philosophy as before. The portfolio manager receives stock selection ideas from country specialists, who generate in-house ratings based on company fundamentals.”

The stock analysis for fundamentals covers financial health, sustainability of the business model and governance standards. The fund also has a preference toward growth-oriented opportunities, he added.

The benchmark is the MSCI Thailand Index. The portfolio currently holds 28 stocks.

Both funds have concentrated portfolios. Comparatively, the JP Morgan fund is a more active portfolio than the Fidelity fund, Ng said.

“The JP Morgan fund is dynamic. The managers make frequent allocation adjustments responding to the changes in broad market conditions.”

For instance, this year, the team largely reduced the overweight allocation to Thailand-based large banks due to their lower profit margins and pricing competition within the sector, according to Ng.

Top sector allocation

Source: fund factsheets

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