HEAD-TO-HEAD: Miton versus Schroders

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The Miton and Schroders funds versus the peer category in Hong Kong. Source: FE. In US dollars. Note: the LF Miton fund does not have a benchmark index. The Schroders benchmark is the Russell 2500 Index.

Performance

Given the Miton fund’s growth tilt, 2017 was its best year since launch in 2013, according to McDermott.

However, the benchmark agnostic strategy caused it to lag in 2018, he added. “It’s agnostic to the index and is not expected to perform when mega-caps, such as the FAANG stocks, are outperforming.

Annual discreet calendar performance (%)

Source: FE Analytics

The Miton product has a bias toward companies which earn the majority of revenues from the US and therefore he expects the fund to outperform when domestic-focused names do well.

Turning to the Schroders fund, McDermott said that the fund tends to outperform when value names are in favour, such as in 2016.

“Due to the diversification of company types in the portfolio, the product is also designed to perform well throughout a market cycle, but typically lags in a very strong environment,” he added.

In terms of volatility, although both funds have different investment strategies, McDermott believes that both are in line with their peers.

“Schroders is predominantly mid-cap, so you would expect a bit more volatility from it. However, its more diverse approach, both in the types of stocks that the manager looks for with the three buckets approach, and the number of holdings, means that the volatility is in line with the sector.

“The Miton fund, whilst very concentrated, has shown very good discipline with sizing their positions and therefore the fund’s volatility is in line with the sector,” McDermott said.

Three-year annualised volatility

Source: FE Analytics

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