HEAD-TO-HEAD: Jupiter vs Franklin Templeton

123456

Luke Ng, FE Advisory Asia

The US Federal Reserve has moved first to raise interest rates, and its counterparts in Europe and Japan are expected to eventually follow, with the ECB pledging to stop buying assets in September.

Rising rates and bond prices tend to have an inverse relationship: When one goes up, the other goes down. Additionally, synchronized global growth has led to concerns about inflation rising or even spiking, particularly in the US. Higher inflation prompts central banks to raise rates more aggressively.

“The current background is relatively negative for the bond market globally,” according to Luke Ng, senior vice president at FE Advisory Asia. “The yield spread in the global fixed income market has been narrowing, resulting in a higher valuation.”

But he believes demand for bonds will not drop off significantly. “Although the general environment is not very supportive for the fixed income market, investors should always find value in allocating money to them due to their typically low volatility compared to equities,” he said.

FSA research shows only 6% of 241 fixed income funds available for sale in Hong Kong had negative returns over three years.

But many fixed income products are similar. FSA found two products that break from the mainstream and asked Luke Ng, senior vice president at FE Advisory Asia, to provide a comparative analysis. The funds are: The Jupiter GF Dynamic Bond Fund and the Templeton Global Total Return Fund.

Data: FE, Morningstar

123456