On 6 March, we will announce our annual Morningstar 2017 Fund Award winners. The core methodology remains the same, and as always, there will be three types of awards given: Category Awards, Fund House Awards and the MPF Scheme Award.
Category Awards and Fund House Awards - methodology remains the same
The awards retain the same methodology combining quantitative scoring with the qualitative judgment of our analyst team. They are designed to recognise strong performance during the year in question, but they do not simply reward one year returns. Indeed, the best funds over one year have all too often just gotten lucky rather than demonstrated real skill. We therefore evaluate five years of history in our awards process and it takes more than strong returns to merit consideration. We also place a heavy emphasis on risk in our calculation and our analysts look at factors such as the consistency of returns, changes to management and outsized risks that might be embedded in the portfolio. You can read the full methodology here.
Best MPF Scheme Award methodology change
There has been a stronger focus on fees both from the regulator and market participants. The Default Investment Strategy (DIS), which was launched on 1 April 2017, has a fee cap of 0.75%, paving the way for more low-cost options in the MPF market, and we have seen certain MPF providers cutting fees on their MPF products.
At Morningstar, we have done numerous studies which suggests that fees are an important indicator of a fund’s future success. We have therefore updated our Best MPF Scheme Award methodology to reflect the growing importance of fees when investors select an MPF scheme. Specifically, we have introduced a 20% weighting for fees assessment in our overall evaluation, which considers each scheme’s average cost compared to peers. You can read the full methodology here.
Awards in 2018
Morningstar Category Awards
Equity:
- Asia-Pacific Equity (Asia ex Japan Equity, Asia-Pacific ex Japan Equity, Asia-Pacific inc. Japan Equity, Asia-Pacific ex-Japan Equity Income)
- Global Equity (Includes all Global Large Cap style categories, Global Equity-Income, and Global Flex-Cap)
- Greater China Equity (China Equity and Greater China Equity)
- Hong Kong Equity
Fixed Interest:
- Asia Bond (Asia Bond and Asia Bond – Local Currency)
Morningstar Fund House Awards
- Morningstar Best Equity Fund House Award
- Morningstar Best Fixed-Interest Fund House Award
Morningstar Best MPF Scheme Award
Stay tuned with the winner annoucement and winners feature on our website in March.
View all Morningstar Hong Kong Fund Awards 2018 articles here.
