Three lower-risk Asian funds leading the pack in 2018
Money Management, using FE Analytics, has looked at the Asian funds (ex-Japan) with the lowest volatility and highest returns for the year to last month’s end, and found the three funds leading the pack.
The MSCI Asia ex-Japan index returned 1.66 per cent for the year to 30 September 2018, which means the CFS Asian Growth fund, the Ellerston Australian MicroCap fund and the SGH Tiger fund returned minimum double the index for the same period.
The MSCI Asia ex-Japan index also had a volatility of 11.50 per cent and a maximum drawdown of -6.41 per cent.
CFS Asian Growth returned 7.07 per cent for the six months to 30 September with a volatility of 5.39 per cent and maximum drawdown of -2.21 per cent, giving it a Sharpe ratio of 0.92 – where the higher the Sharpe ratio, the better the risk-adjusted returns.
In the top quintile volatility-wise was the SGH Tiger fund, which was 4.84 per cent volatile and returned 3.39 per cent. Despite this, the fund has a FE Risk Score of 142 (where the benchmark is 100), suggesting it’s probably had a more volatile past than the last year shows.
The Maple-Brown Abbott Australia Plus Asia Trust was the most volatile of all four top performers at 3.97 per cent, but it also outperformed the rest of the pack with returns of 8.42 per cent.
The chart below tracks the performance of the four funds as compared to the MSCI Asia ex-Japan index for the six months to 30 September 2018.
It pays to pick the lower-risk funds too, as data from FE Analytics shows that the majority of high-risk funds, that is those in the bottom quintile, have produced negative returns.
For example, the most volatile fund, the Saville Capital Emerging Companies fund, has had a pretty bad run this year with volatility of 25.85 per cent and returning -10.09 per cent.
Only one fund in the bottom quintile for volatility sat in the top quintile for returns: the Lakehouse Small Companies fund.
PM Capital Asian Companies, Premium Asia and Mirae Asset Asia Great Consumer Equity all produced negative returns with volatility of between 9.69 per cent and 12.46 per cent.
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