FUND SELECTOR ASIA PACIFIC EX JAPAN EQUITY
Asia Pacific ex Japan equity
We analyse the best, the newest and the biggest Asia Pacific ex Japan equity funds.
Commentary from Paul Kim, director, portfolio management, FundQuest UK
Top ranked funds 3-year performance
FUND PICKER’S COMMENT
PAUL KIM, DIRECTOR,
PORTFOLIO MANAGEMENT,
FUNDQUEST UK
At first glance at the tables
for the largest funds and
best performers over three
years, you are not surprised
to see the names of
the long-established managers
Fidelity, First State,
and Aberdeen.
All three are on both of
these lists, showing that
strong long-term performance
(and good marketing
too) will build the assets
under management.
Showing its strength in
this area is Fidelity, which
not only has two funds on
the three-year performance
table, run by different managers
but also has two
funds on the largest funds
list, both of which are run
by Allan Liu, whose portfolio
management skills and
success over the years have
led to these two funds
amassing over £5.6bn
between them. We have
followed and used Liu’s
funds for many years, over
which time they have
served clients very well.
Hugh Young at Aberdeen
and Angus Tulloch at
First State lead two very
strong Asia teams and both
have a wealth of experience
of investing in the
region built up over many
years. Both companies
have exceedingly strong
reputations in terms of
their Asian track records
and despite being heavily
involved in the running of
the respective groups,
Young and Tulloch have
still retained their love of
stock selection and portfolio
management.
This experience and
proven stockpicking skill
should continue to serve
FUND ANALYSIS
■ Ezra Sun’s Veritas Asian Fund aims to achieve long-term capital
growth above the MSCI Asia Pacific ex Japan with lower volatility.
■ Particular attention is paid to free cash flows and, though it can
invest across the cap scale, a minimum of 75% of the fund will
be in liquid large cap companies.
■ Angus Tulloch holds a concentrated portfolio of around 50 stocks
in the First State Asia Pacific Leaders Fund. Having seen the first
signs of inflation, he warns that there is a possibility of central
banks raising interest rates sooner than expected.
them well and, if the same
three-year performance figures
are run in another 12
to 18 months time, we
would most likely see the
three management groups
mentioned above appearing
again in the lists. The
caveat to this would be if
we saw a reoccurrence of
2009 market conditions,
To 23 Mar ’10. Bid to bid, £, gross income, no cap. Source: Morningstar
which were primarily
driven by cyclical lowquality
stocks and performance
had nothing to do
with company fundamentals,
in which case we
could see these managers
lag the peer group.
At the top of the three
year performance table is
the Nikko AM Asia-Pacific
Fund. While this is the best
performer, with a threeyear
return of 85% (over
double the average return
of 42%), it has amassed
only a relatively insignificant
£3.2m.
This small sum would
probably preclude the fund
from appearing on most
fund selectors’ screens but,
if performance remains
consistently strong, then
despite the small size, assets
will no doubt flow into the
fund. It would be interesting
to see though, if the
team managing this fund
would perform as well with
a much larger pot of
money. Much will depend
on the speed at which the
fund grows.
Top 10 Asia Pacific ex Japan equity funds by 3-year performance
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² mth vol Rating size ($m)
Nikko AM Asia-Pacific B 84.98 0.66 0.91 0.93 7.99 ★★★★★ 3.17 Luxembourg
Fidelity Institutional South East Asia 79.74 0.52 0.92 0.97 7.9 ★★★★★ 334.31 UK
Templeton Asian Growth A YDis $ 75.11 0.35 1.11 0.94 9.66 ★★★★ 5,570.84 Luxembourg
CF Canlife Far East 72.54 0.46 0.9 0.92 7.88 ★★★★★ 104.19 UK
Veritas Asian A £ 70.96 0.5 0.79 0.95 6.87 ★★★★★ 783.34 Ireland
Fidelity South East Asia 70.5 0.33 1 0.96 8.66 ★★★★★ 1,819.91 UK
Tiburon Taipan A 68.18 0.42 0.94 0.85 8.67 ★★★★ 19.29 Ireland
Aberdeen Global Asian Smaller Cos I2 66.73 0.63 0.64 0.72 6.31 ★★★★★ 485.45 Luxembourg
BDT Invest Oriental Focus A $ 66.6 0.4 0.84 0.87 7.56 ★★★★★ 15.57 Ireland
First State Asia Pacific Leaders A 65.01 0.44 0.69 0.9 6.18 ★★★★★ 3,953.66 UK
Top 10 funds – 3-year risk/return
Return (%)
90
Veritas Asian A £
75
60
Fidelity Inst’l Sth East Asia
Nikko AM Asia-Pacific B
Fidelity South East Asia
Tiburon Taipan A
Aberdeen Global
Asian Smaller Cos I2
CF Canlife
Far East
Tiburon Taipan A
45
First State Asia
Pacific Leaders A
BDT Invest Oriental Focus A $
30
Sector average
6
7 8
Standard deviation (%)
9 10
To 23 Mar ’10. Bid to bid, £, gross inc, no cap. Source: Morningstar
Top 3 performing funds vs world index
-30 Nikko AM Asia-Pacific B
MAY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
%
90
60
30
0
Templeton Asian Growth A Y Dis $
Fidelity Instit’l
South East Asia
-60
MSCI World
Mar ’07 Sep Mar ’08 Sep Mar ’09 Sep Mar ’10
Figures in base currency. Source: Morningstar
39
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