HEAD-TO-HEAD: Janus Henderson vs BNP Paribas Parvest

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Both funds use the MSCI World Health Care Index as their benchmarks, with the Parvest fund using the Ucits III-compliant 10/40 version of the index, which imposes concentration limits (performance of both indices was identical over the three-year period ending 31 October).

One of the main factors in the performance of the two funds is exposure to the sub-industries in healthcare, Ng said.

The Janus fund outperformed the benchmark and the Parvest fund by a healthy margin in 2012-14, thanks to its bias toward biotech.  “In 2012-14, the biotech sector performed very well.

“After 2015, you don’t see a very big difference between the performance of biotechnology and pharmaceuticals and in 2016, both biotech and pharmaceuticals underperformed,” he said.

As a result, in 2015 and 2016 both funds underperformed.

So far in 2017, both products have delivered double-digit returns, with the Janus fund doing  slightly better than the index and Parvest underperforming it.

Both funds have a negative alpha, high beta, and volatility exceeding that of the index, as measured on a three-year basis. While the measurements for the five-year period, which includes the biotech boom of 2012-14, put the Janus fund in a better light with alpha of 0.40 (Parvest’s remains negative at -4.98), the numbers underscore the difficulties in outperforming the index in a risky and volatile industry.

Biotech carries high risk. “Biotech companies require a lot of resources for research and development, a sustainable investment before they pay the money back” said Ng. This results in higher risk and volatility.

Data: FE, 31 October 2017, returns in US dollars, ratios are annualised

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