HEAD-TO-HEAD: Pinebridge vs Templeton

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Performance

Over a five-year period, the Pinebridge fund has slightly outperformed the Templeton fund, but both have clearly underperformed the benchmark index, according to FE Analytics.

Ng said the EM rally in 2017 made it difficult for actively-managed emerging market funds to beat the benchmark. He attributed the underperformance to the handful of large cap weightings that drive the index.

“In the indices, the big corporations, particularly in Asia, such as Tencent, Alibaba and Samsung, each take up a rather large weighting. Some funds have to structurally position an underweight to these companies due to the restriction on single stock weighting.”

Ng said investors should note that the Pinebridge fund performance is driven by specific stock selection.

“The portfolio aims to outperform the broader EM index over the long run by investing based on growth cycle research.

“Because of that, there is no one single environment that benefits the fund the most. Bottom-up stock selection is the main reason for its performance,” he explained.

However, over three years, the Templeton fund outperformed the Pinebridge product the index, and peer funds.

“Focusing on value stocks, the Templeton fund may not perform well in a sentiment-driven rally or downturn.

“That said, it still managed to deliver a decent return despite some momentum rally in 2017, which was slightly unfavorable to the value-biased fund.”

In terms of volatility, the Templeton fund is less volatile than the Pinebridge fund and the designated benchmark, but higher than the category of peer funds.

Key indicators, three-year annualised

Source: FE Analytics. Category is emerging market equity funds as defined by FE.

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