Invesco gains, Blackrock loses in FE 100 changes

FE Advisory Asia recently made its bi-annual adjustment to the firm’s portfolio of 100 recommended mutual funds available to investors in Hong Kong. Seven funds were removed and replaced by new ones in the same category.

The Jupiter European Growth Fund replaces the Threadneedle European Select Fund, predominantly since the latter fund’s sponsor has decided to remove it from the list of funds authorised by SFC for sale in Hong Kong, according to Luke Ng, senior VP of research at FE Advisory Asia.

Threadneedle’s fund was also among several of the firm’s products recently pulled from distribution in Taiwan, FSA reported earlier.

Jupiter’s European fund has a growth focus similar to the Threadneedle product. However its scope includes UK equities, while the Threadneedle fund does not.

Two Blackrock funds have been removed from the Top 100 list (chart below) due to recent changes in management. Dennis Stattman, a veteran manager who ran both strategies for the firm since 1989, retired in 2017. With the coming of a new management team, which took over both strategies, Ng noticed a change in the management process and positioning of the funds.

“Region and sector allocations have been moving toward neutral,” he said. “Due to a possible change in the investment process, we decided to remove them from our list because they are no longer what we had recommended in the past.”

Two Invesco funds replaced rival products on the list. The Invesco Global Smaller Companies Equity Fund replaced the Schroder ISF Global Smaller Companies Fund and the Invesco Global Leisure Fund replaced the Fidelity Global Consumer Industries Fund.

The two new funds were added purely on the strength of their ranking relative to the purged ones, according to Ng.

“The funds we’ve taken out fell below the scoring threshold we had set. We believe the new ones will be a better offering,” he said.

In the mixed-asset category, the Templeton Emerging Markets Balanced Fund has replaced the Janus Henderson Balanced Fund, as the latter didn’t make the quantitative screening threshold. The Templeton fund not only has a high FE Crown Fund Rating score, but is also the first fund in the category among the top 100 that offers a focus on emerging markets.

The Janus Henderson Horizon Global Property Equities Fund was removed from the list mainly in order to diversify the category. The firm’s management change, an effect of the merger of Janus Capital Group and Henderson Group, finalised in 2017, did not cause urgent concerns with the fund’s investment process, according to FE.

Nevertheless, FE noted that its collection of property funds was dominated by Janus Henderson and therefore decided to replace one of them with an offering from a different firm.

Screening for the Top 100 starts with the FE Crown Rating, which takes into account the fund’s performance, consistency and risk control. The firm then considers qualitative factors, such as management changes, before making decision on inclusion of a fund.

The final list is compiled from the short list of 250 highest-ranked funds, with selections made to reflect all asset classes, geographies and sectors, while taking into account market needs and investor demand.

Below are the most recent changes made at the end of May 2018.