The FSA Spy market buzz – 16 May 2025
Playing monopoly with ETFs; Eastspring is worrying about loss aversion; Family office explosion; SGX wants more action; The Fear and Greed Index; Retail investors plough on; Deepfake fraud and much more.
HEAD-TO-HEAD: Stewart Investors versus Templeton
FSA compares two emerging markets equity products: the Stewart Investors Global Emerging Markets Leaders Fund and the Templeton Emerging Markets Fund.
FEES
Morningstar emphasises that it is critical to evaluate expenses, because they come directly out of returns.
The firm’s enhanced ratings framework, set out in 2019, places a greater emphasis on fees and expected net benchmark relative performance.
The median ongoing charges figure (OCF) for emerging market equity funds available to Hong Kong retail investors is 1.8%, according to FE Fundinfo.
The OCF for the retail share class of the Stewart fund is 1.57%, which is within Morningstar’s second-cheapest quintile.
“The fund should be able to deliver positive alpha relative to the category benchmark index, which explains its Morningstar analyst rating of Silver,” said Daniels.
In contrast, the OCF for the Templeton fund at 2%, ranks it in Morningstar costliest quintile.
“Such high fees stack the odds heavily against investors,” said Daniels.
As a result, he is sceptical that the retail share class can deliver positive alpha relative to the category benchmark index, hence the Morningstar analyst rating of Neutral.
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