HEAD-TO-HEAD: First State versus Janus Henderson

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

Performance

The First State fund focuses on delivering absolute rather than relative returns. As a result, the lead manager, Sophia Li, doesn’t pay much attention to the benchmark when constructing her portfolio, and sector exposures can diverge substantially from the MSCI Japan index.

The approach has paid off since the fund’s launch three years ago. It has generated 40.17% cumulative return in US dollar terms, outperforming the index by 16 percentage points, according to FE Analytics data.

“The fund does best when the market rallies strongly and when growth is the favoured style,” said Poole.

“Its tremendous performance in 2017 reflected a general investor preference for high growth stocks and markets. The fund did less well last year when sentiment turned, and hence it underperformed its benchmark,” he added.

Moreover, the ability to produce outsized returns comes at the expense of greater price fluctuations than both its peers and the index. Its 16.23% annualised volatility is significantly higher than its category average of 11.53% and the MSCI Japan index of 11.37%.

The fund is also considerably more volatile than the Janus Henderson product, whose annualised volatility of 11.90% is only slightly greater than its benchmark, the Topix index (11.62%).

However, the recent performance of the Janus Henderson fund is more pedestrian at 18.50%, achieving less than half the cumulative return of the First State fund during the past three years.

“Although it has a core-growth strategy, there is value-bias in the Janus Henderson fund which hurt performance in 2017,” said Poole.

In fact, its longer-term returns are far more impressive.

Over five years, the fund has generated 56.21%, outstripping its benchmark by six percentage points and the sector average by 14 percentage points. Its 65.04% cumulative return over 20 years is far in excess of its peers (16.17%), and comfortably better than the Topix index (46.02%), according to FE Analytics data.

Discrete annual performance

Source: FE Analytics. Annual returns in US dollars.

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