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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.
by Rupert Walker

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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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