HEAD-TO-HEAD: JP Morgan versus Matthews Asia

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

PERFORMANCE

“Over the past five years, the JP Morgan fund has been the standout performer,” said McDermott.

It has generated a cumulative 120% return over the period, compared with 76% by its MSCI AC Asia ex-Japan index benchmark and 55% by its sector average, according to FE Fundinfo.

The fund has also outperformed over three years, with a cumulative return of 44%, compared with 25% and 18% by the index and peers, respectively, and has done better than both so far this year, up 26.5%, versus 19.2% and 15.5%, according to FE Fundinfo.

Although the fund has been more volatile than its benchmark and peers — 20.59% versus 19.15% and 18.20% respectively – it has a 1.25 information ratio and a far superior Sharpe ratio (0.47 versus 0.23 and 0.12 respectively).

Stock selection has been a clear driver of performance, according to McDermott.

The performance of the Matthews Pacific Tiger Fund has been steady, but less impressive.

Over five years it is up 60% in US dollar terms, and it has generated a three-year cumulative return of 23.84%, according to FE Fundinfo.

The vehicle’s geographic breadth — particularly its tendency to invest less in China, and more in India and other small/midsize markets than most of its peers and the index – has put it at a disadvantage, noted Morningstar.

The JP Morgan fund has posted better calendar year returns every year since 2015, except in the bear market of 2017, according to FE Fundinfo. However, the Matthews product is more stable, with three-year annualised volatility of 17.37%.

“The JP Morgan fund tends to do better in strong markets, while the Matthews fund falls less in down markets. This has resulted in the Matthews fund being less volatile,” said McDermott.

Discrete calendar year performance

Source: FE Fundinfo. Returns in US dollars. (*2 December 2020)

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