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FE Advisory Asia's Portfolios Outperform and Maintain Risk Overweight in Latest Rebalance

2018-06-27 18:15 794

Approved funds list - FE Advisory Approved List - also sees turnover

HONG KONG, June 27, 2018 /PRNewswire/ -- Resilient earnings growth and gradual money-tightening action by the US Fed -- which other major central banks are expected to follow in the foreseeable future -- have led FE Advisory Asia to maintain an overweight level of risk in their range of risk-targeted portfolios at the latest rebalance.

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FE Portfolios are a total investment solution designed to help wealth advisers by producing superior risk-adjusted returns through an optimal combination of actively managed funds. The three standard portfolios: Cautious, Balanced and Growth are rebalanced twice yearly and the latest rebalance took place in June 2018. The portfolios are constructed exclusively from funds that have made the FE Advisory Approved List which has seen turnover of 7 funds at the latest rebalance.

All three portfolios outperformed the composite benchmark in the six months since the last rebalance. Luke Ng, FE Advisory Asia -- Senior Vice President, Research, comments: "Stand-out performers across all three portfolios in the past six months include JPMorgan Japan (Yen) and Matthews Asia China Dividend.  Performance from these funds stayed firm, particularly when the market whip-sawed in the second half of the period." 

"Money-tightening action by the US Fed has been key to our decision to maintain a slightly overweight risk budget for all three portfolios.  While the US Federal Reserve has been gradually raising the interest rate, effort has also been made to shrink the inflated balance sheet. In addition, fiscal stimulus, including the tax cut that was in place, is likely to drive the US debt level higher. Despite not moving in tandem with the US Fed, other major central banks are expected to follow in the footsteps of the US in the foreseeable future, creating headwinds for fixed income in general."

The FE portfolios are optimised to maximise the overall level of diversification. By analysing the relationships between funds, FE aims to find the best possible mix, where differing strategies are complementary, and further reduce the total risk in the portfolio.  In the past six months, the Growth, Balanced and Cautious portfolios returned 4.34%, 2.68% and 0.59% in US dollar terms respectively.

Luke Ng continued: "Despite the slight risk overweight, we still believe diversification remains an investor's best defence. The latest changes to our portfolios and the FE Advisory Approved List reflect the funds we believe are best at their respective strategies within each asset class - strategies being selected for their suitability in a wide range of scenarios, not just their short-term success.  We believe this approach is why our performance has been so strong in the last 12 months."

Key asset class, sector and geographical views at the latest rebalance:

  • Retained overweight in equities over bonds
  • Reduced emerging market exposure among equities
  • Increased exposure in short-duration strategy among fixed income

FE ADVISORY APPROVED LIST

The FE Advisory Approved List encompasses a broad selection of the highest quality funds spanning all asset classes and sectors from the HK SFC Authorised fund universe. Funds initially undergo a rigorous quantitative screening encompassing FE Fund Crown Ratings, FE Alpha Manager Ratings, FE Group Awards and FE AFI (Adviser Fund Index).  FE's dedicated team of Analysts overlay this with their own independent and unique qualitative analysis.

There was a turnover of 7 funds to FE Advisory Approved List at the latest rebalance.

FE ADVISORY APPROVED LIST -- FUNDS IN AND FUNDS OUT BY ASSET CLASS -- MAY 2018 REBALANCE

FUNDS IN (Sector)

  • Morgan Stanley Global Opportunity (Equity - International)
  • Jupiter European Growth (Equity - Europe inc UK)
  • Templeton Emerging Markets Balanced (Mixed Asset - International)
  • Investec Global Strategic Managed (Mixed Asset - International)
  • Invesco Global Smaller Companies Equity (Equity - International)
  • JPMorgan Global Property Income (Property)
  • Invesco Global Leisure (Equity - Consumer Goods & Services)

FUNDS OUT (Sector)

  • Blackrock Global Dynamic Equity (Equity - International)
  • Threadneedle European Select (Equity - Europe inc UK)
  • Janus Henderson Balanced (Mixed Asset - International)
  • Blackrock Global Allocation (Mixed Asset - International)
  • Schroder Global Smaller Companies (Equity - International)
  • Janus Henderson Horizon Global Property Equities (Property)
  • Fidelity Global Consumer Industries (Equity - Consumer Goods & Services)

NOTES TO EDITORS

About FE Advisory Asia: www.FEAdvisory.com.hk

FE Portfolios: Our portfolios are a total investment solution designed to help wealth advisers. FE Advisory Asia has produced a range of optimised portfolios which are designed to achieve consistent outperformance whilst minimising risk.

The portfolios are optimised to maximise the overall level of diversification using active funds. By analysing the relationships between funds, we aim to find the best possible mix, where differing strategies are complementary and further reduce the total risk in the portfolio.

FE Advisory Asia produce three portfolios that use optimal asset allocation models from AKG as a reference for each level of risk. We optimize our portfolios to match the risk of the reference, but with greater returns and better capital protection. We use the asset allocation models as a guide but allow our portfolios to differ significantly where we are able to diversify away the extra risk. This approach has been developed internally by FE and has been validated by Cass Business School.

FE Portfolios are constructed exclusively from funds that have made the FE Advisory Approved List and have therefore gone through a rigorous vetting procedure.

FE Advisory Approved List: Our approved list of 100 funds builds upon our established suite of research tools to help keep investors better informed. Funds initially undergo a rigorous quant screening to identify the best performers. This screening encompasses four distinct areas; FE Fund Crown Ratings, FE Alpha Manager Ratings, FE Group Awards and FE AFI (Adviser Fund Index).

These four areas combined allow us to accurately scrutinize a fund from all angles. Our dedicated team of FE Analysts overlay this quant analysis with their own independent and unique qualitative analysis. Funds that pass this rigorous two-stage quantitative and qualitative analysis process then make it on to the FE Advisory Approved List.

About FE: www.FinancialExpress.net

FE is a leading provider of data, software and performance analytics to the financial services industry. FE's products and services are designed to interpret and analyse data, helping financial advisers and investors stay well informed and ultimately make sound investment decisions. FE also provides tools and software for fund managers and other financial services firms, including products to assist with fund reporting and analysis as well as fund marketing and presentation materials. FE has offices in the UK, Europe and across Asia Pacific. Its clients include life and pension providers, asset managers, financial advisers and networks, wrap platforms, fund supermarkets, software houses, and financial portals.

Media Contact

Michael Li: Michael@FEadvisory.com.hk +852-3905-1088
Joey Lim: Joey@FEadvisory.com.hk +852-3905-1090

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Source: FE Advisory Asia
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