Head To Head

HEAD-TO-HEAD: HSBC versus JP Morgan

FSA compares two Asia corporate bond funds: the HSBC Asian Bond Fund and the JP Morgan Asian Total Return Bond Fund.

by Francis Nikolai Acosta 25 October 201910 November 2020

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The HSBC and JP Morgan funds versus its sector in Hong Kong. Source: FE Analytics. In US dollars. Note: The HSBC fund’s benchmark index, the Markit iBoxx Asian USD Bond Index, is not available in FE’s database.

Performance

Ge believes that the HSBC product performs better than the JP Morgan fund when Asia credit markets are down.

“The HSBC fund is more conservative in nature, so it should perform better under more volatile market conditions.”

For example, the product performed better in 2018, especially during the fourth quarter, when emerging market assets were sold off.

Discreet annual calendar performance (%)

Fund / sector	YTD 2019	2018	2017	2016	2015	2014
HSBC Asian Bond	9.87	-1.45	5.25	3.64	1.65	7.18
JP Morgan Asian Total Return	8.73	-1.89	4.93	3.88	-0.18	4.95
HKM Fixed Int – Asia Pacific	8.86	-3.07	6.74	3.32	-1.82	2.59

Source: FE Analytics. In US dollars.

He added that the HSBC fund’s outperformance year-to-date is partially driven by hard currency bonds, which have performed better than local currency bonds.

That said, Ge noted that the HSBC product is more volatile than the JP Morgan fund.

Three-year annualised volatility and Sharpe ratios

Fund / Index	Volatility	Sharpe ratio
HSBC Asian Bond	2.57	0.49
JP Morgan Asian Total Return	2.01	0.50
HKM Fixed Int – Asia Pacific	2.51	–

Source: Volatility measures from FE Analytics, Sharpe ratios from Morningstar Direct.

“Based on the way the JP Morgan fund is constructed, it would seem that it would be more volatile.

“But we actually noticed that its volatility is low, partly because the product has volatility targets,” he said.

Both funds have similar Sharpe ratios, which is a measure of risk-adjusted returns.

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