Posted inHead To Head

HEAD-TO-HEAD: Manulife vs Templeton

FSA compares two Asia small cap equity funds: the Manulife GF Asian Small Cap Equity Fund and the Templeton Asian Smaller Companies Fund.
by Fund Selector Asia
Performance

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Three-year performance of the two funds and their benchmarks, in US dollars, on 21 September. Data: FE.

The Manulife fund severely underperformed in 2016, delivering a 5.59% loss, compared to a loss of 1.15% for its benchmark.

“It was expected, given that last year was a value rally,” said Share. “It was mainly the energy stocks and the material stocks that were outperforming, whereas this fund has more of a growth focus, so more focused on IT or consumer names.”

Some growth stocks also did well, but they were mostly in the large cap space, such as Alibaba, Tencent or Baidu. “Since this is a small cap fund, it was unable to participate in that large cap tech rally,” Share said.

The Manulife fund delivered a better performance than the Templeton fund in four out of nine calendar years since the latter fund’s inception: 2011, 2012, 2013, and so far in 2017.

The Templeton fund performed better in 2016 likely thanks to the value bias in some of the stocks the management team likes, Share said. “They try to buy stocks that are trading at a discount to their growth potential. In a value environment like last year, they’ve also done well.”

The Manulife fund shows a higher volatility, predominantly due to the high portfolio turnover, Share noted. “There’s a lot of market timing in there,” she said.

Manulife Templeton
3-year return (cumulative) -5.95% 18.16%
1-year return 10.12% 16.95%
3-year Alpha -5.17 2.71
3-year Beta 1.03 0.85
3-year Sharpe Ratio -0.01 0.32
3-year Volatility 15.71 13.07
Annual turnover 200% – 300% 20%
Data: FE, 31 August 2017, return in US dollars, ratios are annualised.

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