FUND PICKER’S COMMENT
PAUL KIM, DIRECTOR,
PORTFOLIO MANAGEMENT,
FUNDQUEST UK
Many of the groups appearing
on the largest funds list
are well known to the UK
investor community, such
as Threadneedle, Standard
Life and Invesco.
The considerable size of
their funds is unsurprising,
given how well known
these groups are. Unfortunately,
none of these groups
appear in the best over
three years list.
While these groups may
have very good fund managers
– Threadneedle’s
Asia Retail Fund, for example
is managed by the very
experienced and competent
Vanessa Donegan –
being more institutional in
nature, performance of
FUND SELECTOR ASIA PACIFIC EX JAPAN EQUITY
Top ranked funds Assets under management
FUND ANALYSIS
■ The Mark Mobius-led Templeton Asian Growth Fund is one of the
oldest funds having been launched back in 1991. It currently has
a bias towards energy and materials, while Thailand, China and
India are the largest countries on a geographical split.
■ Maggie Lee and C Sambhshivan have jointly run the Invesco
Asia Infrastructure Fund since 2006. The pair believes that
infrastructure-related sectors deserve a re-rating this year,
with earnings sensitive to economic recovery.
■ The fund has been focused on energy – oil exploration and coal –
and material sectors in the first half of 2010. Geographically, it is
focused on China, India, Indonesia and Australia, the commodityrich
and cyclical turnaround countries that will benefit amid the
economic revival.
■ Vanessa Donegan, manager of Threadneedle Asia Fund, says
Asian economies are seeing a robust recovery from the cyclically
depressed levels of 2009, helped by a strong export rebound.
■ But uncertainty over the impact on growth of China’s monetary
and credit tightening may keep markets under pressure in the
shorter term.
To 23 Mar ’10. Bid to bid, £, gross income, no cap. Source: Morningstar
these funds tend to fall
more within the lower
second quartile bracket.
With the average fund
size of the sector standing
at £347m, the top ten largest
funds dwarf this figure,
ranging from £1.3bn to
£5.6bn. But, as already
mentioned, size has not
hampered performance in
any way, with all bar one
of the largest funds falling
in the first and second
quartiles over the last
three years.
While it is arguable that
smaller funds can be more
nimble and managers have
a greater range of companies
to invest in, being able
to invest further down the
capitalisation scale, the
stock-picking abilities of
the larger managers have
more than compensated
for this disadvantage.
Top 10 funds by AUM – 3-year risk/return
Top 10 Asia Pacific ex Japan equity funds by assets under management
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² volatility Rating size ($m)
Templeton Asian Growth A Y Dis $ 75.11 0.35 1.11 0.94 9.66 ★★★★ 5,570.84 Luxembourg
First State Asia Pacific Leaders A 65.01 0.44 0.69 0.9 6.18 ★★★★★ 3,953.66 UK
FF – South East Asia A $ 63.54 0.23 1.02 0.96 8.78 ★★★★ 3,784.89 Luxembourg
Aberdeen Global Asia Pacific Equity A2 50.65 0.17 0.8 0.93 7.03 ★★★★★ 3,341.9 Luxembourg
Schroder ISF Emerging Asia A 51.04 0.08 0.96 0.97 8.24 ★★★★ 2,005.61 Luxembourg
Fidelity South East Asia 70.5 0.33 1 0.96 8.66 ★★★★★ 1,819.91 UK
Invesco Asia Infrastructure A Inc 35.64 -0.24 0.93 0.91 8.2 ★★★ 1,786.76 Luxembourg
Aberdeen Asia Pacific A Acc 54.09 0.23 0.78 0.91 6.86 ★★★★★ 1,551.83 UK
Threadneedle Asia Retail Net £ 45.66 -0.09 0.98 0.97 8.41 ★★★★ 1,353.41 UK
SLTM Pacific Basin 45.41 -0.08 0.94 0.94 8.22 ★★★ 1,318.28 UK
Return (%)
80
70
60
First State Asia
Pacific Leaders A
Aberdeen Asia
Pacific A Acc
Templeton Asian Growth A YDis $
Fidelity South
East Asia
Schroder ISF
Emerging Asia A
FF South
East Asia A $
50
40 Aberdeen Global
Asia Pacific Eq A2
Sector avg
Threadneedle
Asia Ret Net £
SLTM Pacific Basin
30 Invesco Asia Infrastructure A Inc
6
7 8
Standard deviation (%)
9 10
To 23 Mar ’10. Bid to bid, £, gross inc, no cap. Source: Morningstar
Top 3 AUM funds vs world index
90
60
30
%
0
-30
Templeton Asian Growth A Y Dis $
First State Asia
Pacific Leaders A
-60
FF – South East Asia A $
MSCI World
Mar ’07 Sep Mar ’08 Sep Mar ’09 Sep Mar ’10
Figures in base currency. Source: Morningstar
MACRO VIEW ON ASIA PACIFIC
The outlook for the Asia ex Japan region is quite positive, particularly
in comparison to the Western markets of the US, Europe and UK,
where the financial crisis hit at the heart of their economies. These
countries now face many years of rebuilding their finances. But Asia
ex Japan was not affected to anywhere near the same extent.
The local Asian domestic economies are generally much stronger
than in the West and many countries have strong business links
to China. There is, of course, the threat of rising inflation to worry
about as a result of credit mis-allocation and rising input prices (e.g.
energy, raw materials, food, wages and clothing). Another concern is
the endemic corruption in the region, which encourages social unrest
and wasted resources. Investors should expect interest rates to be
increased and credit to be tightened later this year. But overall, the
economic outlook for Asia at present is by far the rosier.
“
While it is
arguable that smaller
funds can be more
nimble and managers
have a greater range
of companies to
invest in, being able
to invest further down
the capitalisation
scale, the stockpicking
abilities of
the larger managers
have more than
compensated for
this disadvantage
”
MAY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
41
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