HEAD-TO-HEAD: Fidelity vs M&G

123456

The three-year performance of the Fidelity and M&G funds versus their benchmark index.

The performance of each fund depends on which style performed better during a specific period, according to Tsymbaluk.

“There has been a clear rotation in the last few years in emerging markets between value and growth,” she said.

For example, in 2016, value outperformed growth, while the opposite happened in 2017.

Looking at the annual discreet performance of each fund, Tsymbaluk said that the Fidelity fund struggled in 2016 because growth didn’t do well. Conversely, it performed well in 2017 as growth stocks rallied, driven by internet names, particularly Alibaba and Tencent. “The fund held those stocks as well,” she added.

The M&G fund, by comparison, did very well in 2016 when value stocks outperformed growth stocks, while it underperformed in 2017.

“What helped the M&G fund in 2016 was its overweight to energy because commodities rallied. It struggled in 2017, but this is to be expected as well because of the fund’s value bias. In addition, energy fell in 2017, as well as other materials and commodities stocks,” she said.

She noted that value-focused funds are moving back into favour, which explains why the M&G fund is performing better year-to-date.

Discreet annual performance

Source: FE Analytics

In terms of volatility, Tsymbaluk said that the Fidelity fund is expected to have lower volatility than the M&G fund because it has more defensive names.

Three-year annualised volatility

Source: FE Analytics

123456