Morningstar analysts favour global equity funds with a more diversified portfolio to avoid artificial intelligence (AI) concentration risks and achieve long term returns.

This is according to the firm’s latest edition of its ‘Best of Breed Asia’ report, which highlighted five actively managed strategies available in Hong Kong or Singapore with a wider opportunity set beyond AI beneficiaries.

“While investor attention remains concentrated on a narrow group of AI beneficiaries, our studies have shown that broadly diversified portfolios generally achieve greater success than thematic ones over the long term,” said Yutong Cheng, associate analyst at Morningstar.

“A global investable universe can give investors access to a broader set of opportunities beyond the dominant technology theme while still offering exposure to AI-related beneficiaries.”

According to data from Morningstar, global equity flows have also grown in line with the US and Europe after multiple years of outsized flows to these two regions.

With this backdrop, Cheng highlighted the importance of a fund’s investment process and team strength when the landscape is constantly changing.

“The strategies best positioned to deliver are those backed by experienced teams, proven processes, and the ability to adapt while remaining true to their philosophy,” she said. “This edition highlights the managers we believe are most capable of doing so.”

BGF Systematic Global Equity High Income

This $15.7bn fund has been managed by Robert Fisher since 2014, alongside named portfolio managers Andrew Huzzey and Muzo Kayacan.

Claire Liang, Morningstar principal, said the fund stands out due to its “extensive resources from a high-quality quantitative team” which supports a “sophisticated process that has delivered high income while retaining meaningful upside participation”.

The BlackRock strategy uses a combination of systematic stock selection, index options overwriting and delta hedging to target a 7% yield with a 0.8 beta relative to global equities.

Fidelity Global Dividend

This $22bn fund is run by Dan Roberts, who has been at the helm since launch in 2012, alongside Tristan Purcell who joined the strategy in 2024.

Jeffrey Schumacher, Morningstar director, highlighted the fund’s experienced leadership and “disciplined, consistently executed investment process”.

The fund aims for a dividend yield of at least 125% of the MSCI ACWI, focused on quality dividend-payers. The managers use fundamental analysis to identify companies with defensible competitive advantages and capable management teams.

JPM Global Select Equity

This $6.9bn fund has been managed by Helge Skibeli since 2015 and Christian Pecher since 2019, supported by Sam Witherow and Craig Morgan who both joined earlier this year.

Henry Ince, Morningstar analyst praised the fund’s veteran leadership and “one of the industry’s deepest analyst teams” that gives it a repeatable stock-picking edge.

The fund employs a bottom-up stock-selection process with a valuation-conscious approach, with the managers favouring premium- and quality-rated stocks with economic moats.

Robeco BP Global Premium Equities

This $10bn fund has been run by Chris Hart since 2008, alongside Josh Jones since 2013. Soyoun Song was named as a third co-manager in 2023.

David Carey, Morningstar senior analyst said this fund stands out due to its “best-in-class investment approach and flexible portfolio construction”.

The strategy looks for stocks with attractive valuations, positive business momentum and strong fundamentals, combining a quant screen with bottom-up research.

T. Rowe Price Global Focused Growth Equity

This $5.3bn fund has been managed by David Eiswert since 2012, supported by Nabil Hanano since 2021.

Adam Sabban, Morningstar associate director said his conviction in this strategy is based on “a proven and talented lead manager whose adaptive investment approach is supportive by extensive global research resources”.

The fund aims for all-weather outperformance over a two-year horizon, looking for buying into quality companies with improving fundamentals trading at inexpensive valuations.