Ng revealed that before 2012, Jeong’s investment model was based on quality cyclicals – very much similar to that of JP Morgan’s style. He changed his management technique in 2012 to reflect his philosophy of taking a long-term view.
“Jeong is aware that the tracking error of [the Invesco fund] can be high since it does not reflect the KOSPI. Nonetheless, Jeong is comfortable with the fact that he is holding a concentrated number of stocks that he is familiar with,” Ng said.
Ng noted that in the case of JP Morgan, Cho and Choi’s holdings include companies that are key constituents in the KOSPI. Both of the managers are supported by three other members on the equity team. Ng said that the team is a very experienced one. Each member has been with the fund house for a decade and each has 15 years of investment experience with different sector specialisations.
Fee review
The Invesco fund’s annual management charge is 2% with ongoing fees at 2.40%. By comparison, the JP Morgan fund’s AMC is 1.5% with ongoing fees at 1.63%. Ng noted that both fund charges are in line with market expectations and would not be a particular concern in terms of fund selection.
In terms of FE crown ratings, the Invesco fund is rated five crowns and the JP Morgan vehicle gets two crowns. (The FE Crown Rating ranks funds based on alpha, consistency and volatility).
Conclusion
Ng said that when making a comparison, one should note the different strategies and keep in mind the risk versus reward perspective. He said that the two funds can complement each other.
“The Invesco fund can be used for core equity exposure with long-term prospects [since the underlying holdings are stable and predictable], while the JP Morgan fund can be used as a satellite strategy to capture valuation mismatch opportunities in the market,” Ng said.
