Key Points:
- A comparison of the FEFI against the MXWD shows the FEFI has outperformed since inception in end-2008
- Year-to-date the FEFI has underperformed the MXWD. In February, the FEFI returned 0.01% while the MSWD returned 2.33%
- Best performing funds held assets in gold, precious metals, materials and energy and resources
- Worst performing funds held Asian equities, in particular those of Korea and Taiwan
Back in 2008, Fundsupermart created one of the few fund indices available in Singapore – the FSM All Equity Index (FEFI). Tracking the performance of active managers listed on the Fundsupermart platform, we sought to validate our belief that an index of active managers can beat passive management.
There is no shortage of passive indices designed to mimic equity market returns, but a more widely established index is the Morgan Stanley All Country World Index (MXWD) which tracks equities across both emerging and developed markets.
The FEFI is constructed using equity funds listed on Fundsupermart, across all geographical regions and markets. The results since 2008 (when the FEFI was launched) are displayed in Chart 1.
Since 2009, the FEFI has outperformed and continues to maintain a substantial lead over the passive MXWD. But past performance isn’t indicative of future performance, as performance in February will show.
One limitation is time, as two years isn’t a sufficiently long period of time to draw very meaningful conclusions, but for now, we can observe the FEFI has stayed ahead of the index. Another limitation is the structure of each index is fundamentally different – the MXWD is weighted by market cap, and is designed to represent the global equity space. The FEFI however is equally weighted and is more heavily weighted in Asia, as Fundsupermart holds more Asia-focused funds and hence is more influenced by Asian markets.
Keeping these limitations in mind, Fundsupermart will be working to create more representative representations for various markets and sectors in the actively managed space. Keep watching this space for developments in the active management industry in Singapore.
Having said that, here’s how active managers fared against passive indices in February 2011.
February 2011
Chart 2 highlights how the FEFI performed in 2011, with February highlighted.
The chart shows the FEFI, in February 2011, continued to underperform the benchmark MXWD. The FEFI posted a 0.01% return, while the MXWD returned 2.33% over the one-month period from end-January 2011 to end-February 2011. On a year-to-date basis, the FEFI has returned -1.48%, while the MXWD returned 3.61%.
Thus far, the first 2 months of 2011 have been tough for Fundsupermart-listed funds.
| Table 1: Month-to-date and year-to-date returns |
| 1/31/2011 |
-1.49% |
1.25% |
-1.49% |
1.25% |
| 2/28/2011 |
-1.48% |
3.61% |
0.01% |
2.33% |
source: iFAST compilations, in SGD terms, dividends reinvested |
Of course, even in a down month, not all funds underperformed. There were outperformers and there were underperformers, and we identify which funds led each group in the next section.
Best Performing Funds of February 2011
| Table 2: Best Performing Funds of February 2011 |
BNPPL1 Eq World Energy USD |
10.61% |
7.47% |
Schroder ISF Jap Eq Alp A Acc USD |
6.43% |
6.01% |
United Gold & General Fund |
-3.43% |
5.87% |
BNPPL1 Opportunities USA USD |
1.67% |
5.85% |
DWS Noor Prec Metals CL J SGD |
-4.53% |
5.03% |
source: iFAST compilations, SGD terms, dividends reinvested |
One recurring theme within the best performing funds in February is the presence of gold and materials funds, or funds that have holdings in materials or resource sectors.
Leading the pack is BNPPL1 Eq World Energy USD with 7.47% return. The fund invests heavily in oil and gas companies, particularly based in North America, where the fund has 67.91% of its portfolio, as reported in its end-Jan factsheet.
Schroder ISF Jap Eq Alp A Acc USD returned 6.01% in February. The fund invests in Japan equity and strategically allocates assets into sectors they favour. Their overweight in machinery, land transport and retail trade (as at 31 January 2011) have helped them outperform other Japan funds.
United Gold & General Fund returned 5.87% in February. The fund, as the name suggests, invests into gold mining companies and other resource companies. Gold and precious metals make up 61.98% of the portfolio (as at February 2011).
BNPPL1 Opportunities USA USD returned 5.85% in February. The fund invests in equities and fixed income, and holds 32.55% in materials, 28.11% in energy, and 19.98% in industrials (as at January 2011).
DWS Noor Prec Metals CL J SGD returned 5.03% in February. The fund invests mainly into gold and precious metal mining equities, with 64.45% in gold equities, 18.42% in precious metals and minerals and holds 17.09% in cash and other assets (as at 31 January 2011).
Best Performing Funds of February 2011
| Table 3: Worst Performing Funds in February 2011 |
| LionGlobal Vietnam SGD |
-14.83% |
-16.70% |
| DWS Asian Small/Mid Cap A SGD |
-12.34% |
-7.81% |
| FTIF-Templeton Korea Fd A(acc) SGD |
-7.76% |
-7.50% |
| Fidelity Korea USD |
-6.34% |
-7.38% |
| Fidelity Taiwan USD |
-7.36% |
-7.35% |
source: iFAST compilations, SGD terms, dividends reinvested |
Worst performing funds held Asian equities, particularly in Korea and Taiwan.
The worst performing funds list is led by LionGlobal Vietnam SGD which returned -16.70% in February. The fund invests in Vietnam-listed companies and companies with operations in Vietnam and holds a 40.2% allocation in financials (as at end February 2011).
DWS Asian Small/Mid Cap A SGD returned -7.81% in February. The fund invests in small and mid cap equities across the Asia ex-Japan region. The fund holds 23.5% in IT companies, 20.40% in industrials and 15.4% in consumer discretionary. In terms of countries, the fund also holds 14.8% in Taiwan and 14.1% in Korea (as at end January 2011).
FTIF-Templeton Korea Fd A(acc) SGD returned -7.50% in February. The fund invests in Korean equities and holds 24.5% in capital goods, 17.8% in semiconductor and semiconductor equipment and 11.7% in banks (as at end January 2011).
Fidelity Korea USD returned -7.38% in February 2011. The fund invests in Korean equities and holds 21.1% in IT companies, 20.5% in consumer discretionary companies, and 18.6% in materials (as at end January 2011).
Fidelity Taiwan USD returned -7.35% in February 2011. The fund invests in Taiwan equities and holds a large 50.6% in IT, 17.5% in financials and 12.8% in materials (as at end January 2011).
Related Articles:
FEFI Starts 2011 On A Negative Note
FEFI Ends 2010 On a High
iFAST's Key Investment Ideas for 2011
FEFI Inches Higher in October
FEFI Gains 7.24% in September
FEFI Returns 4.51% in July
FEFI Sell Down Slows in June
FEFI Sold Down In May
Thailand and Europe Weigh On FEFI in April
FEFI Continues Rising in March
Commodities Funds Outperformed FEFI in February
A New Year Sees FEFI Down 3.9%
FSM All-Equity Fund Index (FEFI) up 50.7% in 2009
Introducing the FSM All-Equity Fund Index (SG)
FSM All-Equity Fund Index (SG) Methodology
FSM Fund Indices |
