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HONG KONG, Jan. 31, 2018 /PRNewswire/ -- Resilient global growth, market liquidity and favourable equity valuations in emerging markets have led FE Advisory Asia to increase the levels of risk in their range of risk-targeted portfolios at the latest rebalance.
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 December 2017. The portfolios are constructed exclusively from funds that have made the FE Advisory 100 list which has seen turnover of 12 funds at the latest rebalance.
Luke Ng, FE Advisory Asia - Senior Vice President, Research, comments: "There are few reasons behind our call to slightly overweight our risk budgets for all three portfolios. These include resilient global growth that is backed by improving corporate earnings, market liquidity which remains sufficient amid generally accommodative central banks policies, and equity valuations which remain reasonable - especially in emerging markets."
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 2017 the Cautious, Balanced and Growth portfolios returned positive performance every month and 10.43%, 16.03% and 23.52% in US dollar term respectively.
Luke Ng continued: "Despite the slight risk increase, we still believe that it is difficult to make market predictions at present and covering all bases is the wisest move. Diversification remains an investor's best defence. The latest changes to our portfolios 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:
FE ADVISORY 100
The FE Advisory 100 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 FE Analysts overlay this their own independent and unique qualitative analysis.
There were 12 new funds added to FE's top 100 recommended funds at the latest rebalance.
FUNDS IN (see full list below)
Fidelity Funds - Asian High Yield Fund
"The strategy is led by an experienced manager, who is backed by a well-resourced team. It delivered strong and consistent performance over a long run. We admired the customised balanced approach it pursues to add diversity for the strategy, as well as the credit selection capability to avoid bad performing debts by uncovering fundamental weakness of these issuers before they were realised by the market."
JPMorgan Korea Fund
"The strategy primarily focuses on companies that present value opportunities with growth and/or quality attributions. It consistently outperformed markets and peers over multiple periods. We are happy to place the fund alongside another Korean equity fund that we have been recommending, as they both delivered strong long-term performance despite the fact that the way they invest is very different."
FUNDS OUT (see full list below)
Fidelity Funds - European High Yield Fund
"We have been seeing strong yield compression in the asset class, driving prices towards a historical high. With increasing uncertainty, we have taken the decision to reduce our offering in the sector, and removed Fidelity European High Yield from our FE Advisory 100 accordingly. The fund was replaced by an Asian High Yield strategy that was also managed by Fidelity. Overall, we saw better risk-return profile in Asian high yield in long term."
FE ADVISORY 100 - FUNDS IN AND FUNDS OUT BY ASSET CLASS - DECEMBER 2017 REBALANCE
Funds In (Sector)
AB FCP I American Growth Portfolio (Equity - North America)
BlackRock GF World Healthscience (Equity - Health)
Fidelity Asian High Yield (Fixed Int - Asia Pacific)
Fidelity Emerging Market Debt (Fixed Int - Emerging Markets)
Fidelity Global Consumer Industries (Equity - Consumer Goods & Services)
Fidelity Latin America (Equity - Latin America)
Invesco India Equity (Equity - India)
JPM Emerging Markets Equity (Equity - Emerging Markets)
JPM Europe Small Cap (Equity - Europe Small/Mid Cap)
JPMorgan Korea (Equity - Korea)
MFS Meridian Global Concentrated (Equity - International)
Pimco GIS Global Real Return (Fixed Int - Global)
Funds Out (Sector)
Fidelity America (Equity - North America)
Janus Global Life Sciences (Equity - Health)
Fidelity European High Yield (Fixed Int - Euro High Yield)
Invesco Emerging Markets Bond (Fixed Int - Emerging Markets)
Amundi CPR Global Lifestyles (Equity - Consumer Goods & Services)
Aberdeen Global Latin American Equity (Equity - Latin America)
Allianz Thailand Equity (Equity - Latin America)
AB FCP I Emerging Markets Growth Portfolio (Equity - Emerging Markets)
Parvest Equity Europe Small Cap (Equity - Europe Small/Mid Cap)
Fidelity Pacific (Equity - Asia Pacific inc Japan)
Invesco Global Structured Equity (Equity - International)
AB SICAV I Global Plus Fixed Income Portfolio (Fixed Int - Global)
NOTES TO EDITORS
About FE Advisory Asia www.feadvisory.com.hk
FE Model 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 uses 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 100 and have therefore gone through a rigorous vetting procedure.
FE Advisory 100: Our recommended 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 100.
Media Contact
Michael Li
Michael@FEadvisory.co.hk
+852-3905-1088
Joey Lim
Joey@FEadvisory.com.hk
+852-3905-1090
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