Morningstar Hong Kong Fund Awards 2012 has come to a successful end. The results were announced on 28 March 2012. The Morningstar Hong Kong Fund Awards 2012 recognize retail funds and fund groups that added the most value for investors within the context of their relevant peer group in 2011 and over the longer term. Winners are selected using a quantitative methodology with a qualitative overlay developed by Morningstar that considers the one-, three- and five-year performance history of all eligible funds, and adjusts returns for risk using Morningstar Risk, a measure that imposes a higher penalty for downside variation in a fund’s return than it does for upside volatility.
Mr. Nick Cheung, Chief Executive Officer for Morningstar Asia, said, “It has been 10 years since we brought Morningstar Awards to Asia. ‘Investors First’ remains one of our core values, and we have emphasized quality over quantity by selecting just twelve category winners this year”.
Mr. Sunny Ng, Director of Asia Fund Research for Morningstar Asia, shared his views on the fund industry in Asia, and in particular discussed fund ownership levels in the region. “While the wealth of individuals in Asia continues to grow at a record pace, fund ownership in most Asian countries remains well below 10%. This is significantly lower than their Western counterparts, especially the United States where it is nearly 50%”. He noted that, “There are three major barriers to fund ownership growth in the region: short-term performance orientation, high distribution/management fees and misalignment of interests between investors and asset managers”.
One of our honorable guests, Janet Chong, Senior Vice President of Consumer Investment & Insurance Product, Consumer Banking for DBS Bank (Hong Kong) Limited, agreed that local investors tend to focus on short-term return and in turn, investors might miss out better longer term growth.
To unlock the growth of Asia’s fund management industry, Ng proposes that potential catalysts could be investor education and responsible product development. At the moment, much of the focus in terms of product development in Asia is on trendy short-term funds that are easy to sell. These products often charge higher management and up-front fees (as distributors and asset managers have shorter time periods to break even) and are often the best performers of yesteryear. Products that chase past performance can create poor investment outcomes for investors, which ultimately leads to rapid redemptions. More responsible product development coupled with proper investor education could help break the cycle and encourage a prosperous and stable funds industry in the region.
It is still a long way to go and asset managers are facing challenges, especially for those active fund managers. Guest speaker, Mr. Paul Pong, Chairman of IFPHK, pointed out one of the key challenges is the rising popularity of the passively managed investment vehicles. Nevertheless, he believes that managers with good reputation, perseverance, and most importantly, respect and recognize by the industry players, such as the Morningstar category awards winners, can overcome the barriers and add value for investors.
The winners of the Morningstar Hong Kong Fund Awards 2012 are:
Equity Fund Category | Fund Winner |
Asia ex-Japan Equity | First State Asian Growth Fund I |
Asia-Pacific Equity | Aberdeen Global - Asian Smaller Companies Fund A2 |
Europe Large-Cap Equity | MFS Meridian Funds European Value Fund A1 USD |
Global Emerging Markets Equity | First State Global Emerging Markets Leaders Fund I |
Global Large-Cap Equity | Aberdeen Global - World Equity Fund A2 |
Greater China Equity | First State Hong Kong Growth Fund I |
Japan Large-Cap Equity | Aberdeen Global - Japanese Equity Fund A2 JPY |
US Large-Cap Equity | ING (L) Invest US High Dividend Fund P Cap |
Fixed Income Fund Category | Fund Winner |
Asia Bond | HSBC Asian Bond Fund (Class AM-USD) |
Global Bond | Legg Mason Brandywine Global Fixed Income Fund A Inc |
Global Emerging Markets Bond | MFS Meridian Funds Emerging Markets Debt Fund A1 USD |
High Yield Bond | Invesco Global High Income Fund AM |
For more information about the awards and the methodology, please click here.
