Fund selector AsiA pAciFic ex JApAn Funds
Asia Pacific ex Japan funds
We analyse the best, the newest and the biggest Asia Pacific ex Japan funds.
commentary from Justin oliver, co-manager of collins stewart selectFunds
top ranked funds 3-year performance
“
interestingly,
First state and
Aberdeen are indexagnostic
and do not
blindly base portfolio
construction on the
msci stock or country
weights
”
Justin Oliver, co-manager,
Collins stewart selectfunds
top 10 funds – 3-year risk/return
50
30
Return (%) 40
20
10
Sector average
4
5 6
Standard deviation (%)
To 6 Oct ’08. Bid to bid, £, gross income, no cap
Source: Morningstar
Fund AnAlysis
n in the third quarter, the top-performing Veritas Asian Fund
returned -20%, compared with a sector loss of 24%. it is down
33% year-to-date (-37.6% for the sector). the fund’s manager,
the much-respected ezra sun, blames the significant slump in
stock prices and an unprecedented level of volatility.
n He has increased his cash holding in the fund; reduced weightings
to commodity-related stocks that have had a dismal quarter as
fears of a global slowdown spread; and is more positive about
consumer companies whose valuations are more realistic and
offer significant long-term value.
First State Asia
Pac Leaders A £
First State
Asia Pac A £
First State Asian
Eq Plus I Inc
Veritas Asian £
Fund Picker’s
comment
Justin Oliver,
CO-manager, COllins
stewart seleCtfunds
Asian stock markets have
traditionally been viewed
as an area where momentum
players rule, but such
exposure can be achieved
through more passive
Investec GSF Asian
Equity A Inc $
First State
Asian Gr I Acc
FF Inst’l Pacific
(ex Jap) I Acc $
top 10 Asia pacific ex Japan funds by 3-year performance
to 6 Oct ’08. Bid to bid, £, gross income, no cap. source: morningstar
Abs Asia AM Pac
Rim Equity R/A $
Fidelity South
East Asia
FF South
East Asia A $
7 8
top 3 performing funds vs world index
%
120
100
80
60
40
20
0
3-year 3-year 3-year 3-year 3-year morningstar Fund domicile
% chg Alpha Beta r² mth vol rating size (£m)
veritas asian £ 44.9 0.54 0.85 0.91 5.73 HHHHH 303.55 ireland
first state asia Pacific leaders a £ 43.79 0.62 0.71 0.86 4.93 HHHHH 1,737.11 uK
first state asia Pacific a £ 38.14 0.51 0.7 0.88 4.79 HHHHH 774.69 uK
abs asia am Pacific rim equity r/a $ 33.83 0.31 0.94 0.8 6.8 HHHHH 239.19 luxembourg
first state asian equity Plus i inc 33.48 0.44 0.68 0.9 4.61 HHHHH 730.2 ireland
ff – institutional Pacific (ex Japan) i acc $ 33.19 0.39 0.77 0.79 5.56 HHHHH 26.92 luxembourg
investec gsf asian equity a inc $ 32.43 0.42 0.96 0.96 6.31 HHHHH 296.6 luxembourg
first state asian gr i acc 38.46 0.48 0.73 0.91 4.96 HHHH 83.87 ireland
fidelity south east asia 35.32 0.31 1.12 0.96 7.36 HHHH 1,002.57 uK
ff – south east asia a $ 33.71 0.3 1.04 0.94 6.89 HHHH 1,870.2 luxembourg
investment. ETFs are available
and can be used to
make shorter-term tactical
investments in the region.
Although active management
can add value over
and above such strategies,
it should be viewed as
a longer-term investment;
the diverse nature of the
region, larger investment
universe and subsequent
heightened level of individual
stock opportunities
do make for rich pickings
for those with the talent of
finding such companies.
But it should be appreciated
that such analysis, even
if successful, may not necessarily
realise immediate
rewards and even the best
fund managers will suffer
periods of more lacklustre
First State Asia
Pacific A Acc
-20
Oct ’05 Apr ’06 Oct
Source: Morningstar
34 PORTFOLIO ADVISER [www.portfolio-adviser.com] DEcEMbER 2008
First State Asia
Pac Leaders A Acc
relative returns. Even more
so than other equity investment,
active managers in
the region should only be
judged over a minimum
three-year time frame.
First State’s skill in the
sector is borne out by their
performance. Its Asia Pacific
Leaders Fund has less beta
than the average fund in
the sector but has produced
returns twice the level. So
its alpha score is very high.
We know First State well
and have used this as a
core holding within our
multi-asset funds. A characteristic
that favours its core
holding is that the firms in
which the fund typically
invests exhibit lower levels
of gearing, stronger cash
flows and lower earnings
MSCI World $
Apr ’07
Oct
Veritas Asian A £
Apr ’08
Oct
volatility than the general
market. This approach has
produced consistent longterm
outperformance.
Aberdeen is another
stalwart of Asian equities
(as seen on page 42). Their
strong regional presence
and stock expertise is
shown in their top quartile
performance.
The exceptional characteristics
of First State are
also present in Aberdeen
and both are a stable, safe
pair of hands. Should
investors hold both? We
would argue not, given
that both exhibit similar
risk/return profiles. Both
will likely protect well in
downturns but we would
not necessarily expect
them to capture all of the
upside when conditions
are more supportive.
Interestingly, both First
State and Aberdeen are
index-agnostic and do not
blindly base portfolio construction
on the MSCI stock
or country weights.
When it comes to portfolio
construction, we use
Investec and its index-aware
style components as our
‘index plus’ exposure It provides
broader market exposure
but seeks incremental
returns above the respective
MSCI Index.
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