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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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CONCLUSION

“Although it shouldn’t be considered a ‘core’ emerging markets equity strategy, the Stewart fund should generate long-term alpha,” said Daniels.

“Our view is based on confidence in the manager’s conviction to his process and strategy, which is based on his skill, knowledge and experience,” he said.

Morningstar, whose criteria is based on historical risk-adjusted returns, has awarded the Stewart fund three-stars.

Under its enhanced rating methodology, which places an emphasis on fees and benchmark-relative performance, the strategy also earns a Morningstar analyst rating of Silver.

FE Fundinfo, which bases its assessment on a fund’s three-year history of delivering alpha, minimising relative volatility and producing consistent returns, is also impressed and has awarded the fund four crowns.

“The fund benefits from a solid lead manager who employs a best-in-class investment approach,” said Daniels.

Morningstar also assigns the Templeton fund three stars, but only a Neutral analyst rating because of its high fees.

FE Fundinfo rates it lower than the Stewart product, with three crowns.

“The Templeton product is a reasonable offering, but we’re not convinced that it can deliver long-term alpha,” said Daniels.

“While its recent strong returns are encouraging, we continue to have reservations and therefore believe better options exist,” he said.

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