Aberdeen edges First State in emerging market stakes
The two groups dominate this area, but Aberdeen’s superiority in the investment trust universe gives it the upper hand.
Aberdeen has scored a narrow victory over its biggest rival First State in the latest FE Trustnet
poll, with 57.14 per cent of investors saying they rate the group as a stronger emerging market outfit.
While there is little to separate the groups in the total return stakes, Richard Troue of Hargreaves Lansdown says the superior performance of Aberdeen Emerging Markets
in recent years has probably tipped the scales in Aberdeen’s favour.
However, he also warned investors against reading too much in to short-term data.
"Aberdeen followed up their strong performance in 2008 when the markets went down with outperformance in 2009 when the markets rebounded," he explained.
"This is very unusual for Aberdeen. Indeed, in speaking to the managers they made it clear that this was a one-off and investors shouldn’t expect it to happen again."
Both groups are known for their ability to protect against the downside, by investing in quality, stable companies with strong balance sheets.
In 2008, the Aberdeen Emerging Markets and First State Global Emerging Markets Leaders
funds fell by 23.63 and 18.83 per cent respectively, compared with losses of 35.39 per cent from the MSCI Emerging Market index.
Year-on-year performance of funds vs sector
Source: FE Analytics
||2011 returns (%)
||2010 returns (%)
||2009 returns (%)
||2008 returns (%)
||2007 returns (%)
|First State Global Emerging Markets Leaders
|Aberdeen Emerging Markets
|MSCI Emerging Markets
While Jonathan Asante’s First State fund followed this up in 2009 with underperformance of around 9 per cent, Aberdeen Emerging Markets – which is headed up by Devan Kaloo’s emerging markets team – returned slightly more than the index.
Kaloo’s record over both three and five years is stronger than Asante’s, though First State Global Emerging Market Leaders has been less volatile.
Performance of funds vs sector over 5-yrs
Source: FE Analytics
There is also little to separate the groups' offerings in the Asia Pacific ex Japan sector. With returns of 274.39 per cent, FE Alpha Manager Angus Tulloch’s
First State Asia Pacific fund has a better record than rival Hugh Young's Aberdeen Asia Pacific fund over 10 years, although the latter has returned more over three.
First State Asia Pacific is currently soft-closed, although Tulloch’s First State Asia Pacific Leaders
portfolio, which is still open to new money, has a similar record.
First State Greater China Growth and Aberdeen Global Chinese Equity
have similar records over one, three and five years.
With returns of 60.12 per cent, First State Indian Subcontinent has outperformed Aberdeen Global Indian Equity by more than 17 per cent over five years, although over three years the margin of outperformance is just 4 per cent.
Neither of the group’s Latin American portfolios have an adequate track record for comparison, and Aberdeen is yet to enter the sustainability market, which First State has had a great deal of success with following strong performance from its Asia Pacific Sustainability and Global Emerging Market Sustainability offerings.
Both groups have 11 emerging market-focused funds in the IMA unit trust and OEIC universe, although a greater proportion of First State funds have soft-closed, including the likes of First State Greater China Growth
, First State Asia Pacific Sustainability
and First State Indian Subcontinent
With so many top-rated portfolios now unavailable to retail investors, Aberdeen’s strength in the closed-ended space could be a big advantage in the foreseeable future.
First State has little presence in the AIC Investment Companies universe, with only the Scottish Oriental Companies investment trust to its name. The portfolio, which Tulloch recently took over from Susie Rippingall, has returned less than its Aberdeen Asian Smaller Companies rival over one-, three-, five- and 10-year periods, with more volatility.
Performance of trusts over 10-yrs
Source: FE Analytics
Aberdeen, on the other hand, has a number of sector-leading portfolios. With returns of 586 per cent, the Aberdeen New Thai IT
is one of the best-performing investment trusts of the last decade. Aberdeen New Dawn
is another one with stellar long-term returns, while newcomer Aberdeen Asian Income
has performed well since its launch in 2005.
Overall, Aberdeen has eight emerging market-focused investment trusts.