Posted inNews

How well did your portfolio perform vs FE’s?

For full year 2017, FE’s cautious, balanced and growth portfolios were up in double digits, but the real test will come during a sustained market downturn.
How well did your portfolio perform vs FE’s?

For one year, FSA has been featuring monthly performance of the FE Advisory portfolio. For the full year 2017, the cautious portfolio was up was 10.4%, the balanced 16% and the growth 23.5%.

The growth portfolio beat the S&P 500, which was up 21.8% during the same period.

No money is invested in the portfolios, said Michael Li, head of Asia business for FE. The main clients – financial advisors and insurance groups – use the models as a transparent, straightforward third-party benchmark for their own portfolios, he said.

“The three portfolios – conservative, balanced and aggressive – are designed for the retail investor base and use SFC-authorised funds,” added Luke Ng, senior VP of research at FE Advisory Asia.

Only actively-managed mutual funds are used, with typically 8-12 products in each of the three portfolios.

In order to pick a fund for the portfolio, it must be included in the FE 100, a ranking of the best SFC-registered mutual funds according to alpha, volatility and consistency of performance, Ng said.

The qualitative part involves looking at the fund manager’s career track record since year 2000. He also factors in the five-year track record of a strategy at a given fund house.

Rebalancing is done twice per year, with an emphasis on low turnover.

Although the portfolios haven’t been through a complete market cycle, and certainly no sustained market downturn, Ng believes FE’s models will have lower volatility than competing models when a prolonged market fall occurs.

“The key factor we consider is diversification. So the portfolio is designed to smooth out volatility to get better risk/return,” Ng said.

Part of the Mark Allen Group.