First State Dividend Advantage Fund vs Schroder Asian Growth Fund (Updated 2019)

Last updated on April 21st, 2019 at 02:38 pm

 

First State Dividend Advantage Fund (FSDA) updates 2019

First State Dividend Advantage Fund is a unit trust fund that has a current fund size of $2.6B as at Feb2019.

It feeds into First State Asian Equity Plus Fund which invests in companies with a regular and above average income as well as having the potential for long-term growth.

Dividend is about 3.6% per year currently.

 

So What is First State Dividend Advantage Fund (FSDA) Performance Like?

A Strong 10-year performance vs its peers

It earned its reputation due to its long-term record:

1. Ranked 8th out of 256 on the score for the least “Max Drawdown”.

This means your heart will not skip a beat as it is stable, which is good!

A possible reason is that the fund has more holdings in consumer staples than most funds. Consumer staples are companies that provide you goods and services for your “daily living” needs. Companies like P&G or Sheng Song.

2. Ranked 15th out of 256 for its “Total Return”. This is definitely good and we will examine why.

3. Delivered 10.5% p.a. over last 5 years and 12.5% p.a. over last 10 years.

This beats CPF-OA interest rates of 2.5% both hands down by a good margin if you can invest for the long term.

Updated with Feb 2019 factsheet

 

Quarterly breakdown of returns (USD)

Source: https://citywireasia.com/fund/first-state-dividend-advantage-sgd/c40793

 

What we can learn: Even with such a good ranking for the least “Max Drawdown”, it still lost 38.6% in the year of 2008.

 

Average performance over the last 3 years

Compared to its high ranking based on it’s 10-year returns, it only ranks 80 out of 408 for performance over the last 3 years. This is a slightly above average showing.

 

So why the stark difference between its strong 10y performance and its average 3y performance?

It is because back in 2014, First State Dividend Advantage Fund had around 23% of its holdings in Indian equities. In that year, Indian equities skyrocketed by >40% as Prime Minister Modi won the election and the Indian economy experienced the “Modi Effect”.

Comparatively, HK equities did only 12% in year 2014 (as shown below).

Therefore, the strong 2014 performance allowed FSDA to achieve its superior 10y performance!

Schroder Asian Growth Fund (SAGF) updates 2019

SAGF’s current fund size at Mar 2018 is $1.58B.

It was number one fund in year 2017!

Hence, the superior returns pulled the returns upwards and SAGF is the NUMBER 2 out of 408 peer funds over the 10y period (updated Feb2019).

FSDA is a decent number 15 out of 408.

As stated on its factsheet, the Schroder Asian Growth Fund will be broadly diversified with NO specific industry or sectoral emphasis.

It does not favour high dividend companies as compared to FSDA.

Personally, I like funds which give the fund managers flexibility to invest and be different to the index.

 

What is Schroder Asian Growth Fund (SAGF) focused on?

As illustrated below, SAGF has investment into the tech giants of asia.

These familiar names include Samsung, Tencent and Alibaba as shown below (Fund April2019 factsheet)

China and HK exposure take up more than 55% weightage in the fund (Fund April2019 factsheet).

In USD terms, SAGF did >54% in 2017 which is a fantastic return.

Almost 20% more than FSDA!

SAGF USD Quarterly based returns

 

Should you buy Schroder Asian Growth Fund or First State Dividend Advantage Fund?

Broadly saying, anything that appreciates in price more carries more risk of becoming expensive in valuation. Therefore, it is NEVER wise to invest purely based on last year’s results.

This chart shows that from April 17 to Oct 17, an investment in SAGF would have given you extra 10% returns. But an investment in FSDA would have given you an extra 2% return as it is more stable.

 

Investment suggestions

The managers of the First State Dividend Advantage Fund (FSDA) have shown great discipline in their investment approach.

I.T is a hot sector now but their allocation is at 20.9%, which seems to be much lesser than its peers. They have kept this allocation range for more than a year since I’ve tracked it closely.

Both FSDA’s and SAGF’s top holding is coincidentally TSMC which is THE HEAVY WEIGHT of the semiconductor industry. This company pays a dividend yield of about 2.7%p.a.

 

But what is a strategy and price level to start buying into these funds?

If it has appreciated so much already, is it a good time to buy still?

 

Ps: Both funds are CPF-OA and SRS approved

Contact me if you would like to discuss further.

Credits: www.citywire.sg

 

Josh Tan Jian Liang (CHFC) Principal Author

REVIEWS: https://www.josh-tan/wall-of-reviews. COMPANY: Promiseland Independent Pte Ltd. EXPERIENCE: 11years.

Leave a Reply

Your email address will not be published. Required fields are marked *