HEAD-TO-HEAD: Franklin Templeton versus Neuberger Berman

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

Performance

The Franklin fund has generated a 68.0% three-year cumulative return, outperforming the average 51.9% return of North American equity products available to Hong Kong retail investors, but falling short of its Russell 3000 Growth index benchmark (80.7%), according to FE Fundinfo.

It has consistently done better than its peers for each calendar year since January 2017, but lagged in 2016. Last year, the strategy’s return of 42.7% exceeded it benchmark (37.9%), FE Fundinfo data shows, helped by strong stock selection in the consumer discretionary and healthcare sectors.

However, “the fund has struggled this year because of the widespread rotation out of growth stocks into value and cyclical sectors,” said Savage.

In previous years, “it benefited from the growth tailwind, and performance was less attributable to superior stock selection,” she added.

The effects of style preferences have affected the NB strategy in the opposite way, Savage noted.

The fund has posted a 45.9% three-year cumulative return, which is less than both its S&P 500 benchmark (621.2%) and its North American equity category average, according to FE Fundinfo.

Last year was especially disappointing, in comparative terms. It managed to return just 12.5%, five percentage points less than its benchmark, and significantly over-shadowed by the growth-oriented Franklin strategy.

However, the style rotation advocated by several strategists and adopted by many US equity funds has given the NB fund a boost.

It is up 11.9% for the year to 4 June, slightly better than its peers (11.8%), and much stronger than the Franklin strategy (2.2%), FE Fundinfo data shows.

“The NB fund suffered severely during the March 2020 sell-off largely because of its exposure to the food & beverages, and services sectors,” said Savage.

“However, it regained some ground in the final quarter of last year, and has subsequently benefited from the style rotation,” she added.

The Franklin and NB strategies have similar volatilities, respectively 22.8% and 23.8% annualised over three-years, according to FE Fundinfo.

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars. *31 Dec 2020 – 4 June 2021

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