HEAD-TO-HEAD: JP Morgan versus Schroders

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

Performance

The JP Morgan has lagged its category index, but has achieved its objective of generating high income for investors and managed risk relative to its target range of 6%-12% from its September 2011 inception.

Moreover, on a peer-relative basis, the strategy outperformed its US dollar moderate allocation category peers on both a risk-adjusted and absolute return basis, ranking in the top quartile.

The fund has generated a three-year cumulative return of 22.82%, with annualised volatility of 10.96%, according to FE Fundinfo. In comparison, the average peer in the mixed asset international category returned 19.54%, during the same period.

Yet, the fund has suffered periods of significant drawdowns.

During the coronavirus-driven market panic of 2020’s first quarter, the strategy lost 15%; prior to the sell-off, the strategy was hurt by its mistimed bet against equities that left it on the side lines for much of 2019’s broad market gains. The strategy is also more vulnerable to losses during periods of credit-related market dislocations such as in 2008, 2011, and 2015 given its sizeable exposure to high yield debt.

The fund has maintained a consistently high level relative to category peers. Given that the portfolio’s underlying holdings generated sufficient natural income for income distributions, capital was preserved and not eroded.

The Schroders fund’s long-term performance has been decent despite experiencing the strategy’s worst relative calendar year performance in 2020 since its inception, according to Ge.

It has posted a three-year cumulative return of 16.44%, with annualised volatility of 10.85%, according to FE Fundinfo. The performance is half the return of the average mixed asset Asia Pacific fund, which has generated 32.69%, during the same period.

Pandemic provoked disruptions together with income-related headwinds severely damaged portfolio returns during the year.

Relative to the strategy’s internal reference index, equity selection detracted the most, mainly from Singapore retail, industrial, and office Reits, which were affected by lockdown measures. Strong outperformance of the growth versus income style in the subsequent market rebound further pressured returns given the equity sleeve was primarily invested in dividend stocks.

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars. *31 Dec 2020 – 28 May 2021

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