HEAD-TO-HEAD: First State versus Invesco

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The First State and Invesco funds versus their sectors in Hong Kong and Singapore. Source: FE. Note: the products’ benchmarks are not available on FE.

Performance

Nel believes that the First State Fund outperforms its peers during bear markets because of the equity sleeve’s focus on quality stocks. However, it may lag its peers during market rallies because of that focus.

“But it has consistently outperformed its index and its peers,” Nel noted.

Turning to the Invesco fund, Nel said that the product’s flexibility should enable it to participate more in an equity rally, and thus, should outperform.

“We do expect the product to do better [than the First State fund], especially if there is more upside in equities,” he said.

However, the fund historically has underperformed its peers as well as its benchmark, Nel noted.

“If you look at only high dividend stocks, you can fall into value traps,” he said, adding that the change in strategy in 2017 to have a total return approach should be positive for the fund.

“But it’s still too early to see whether this change will be good,” he said.

Discreet annual calendar performance (%)

Source: FE

In terms of volatility, the First State fund is more volatile than the Invesco product, according to data from FE.

Source: FE

“But First State’s downside protection is better, as well as its risk-adjusted returns,” he said.

The First State fund’s three-year annualised Sharpe ratio, which measures risk-adjusted returns, is 0.46, while the Invesco fund’s Sharpe ratio is 0, according to FE.

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