Jonathan Miller: Welcome to this week’s Morningstar fund manager check-up. The Aberdeen Emerging Markets fund has had Devan Kaloo at the helm for 17 years. His team is based in London but is supported by the wider Asia team in Singapore, as well as other regional hubs.
The investment process has been consistently applied for over two decades with quality and value the key tenets. Governance and shareholder friendly management are also important when assessing a company’s merit. This has led to shunning direct investments in parts of the Chinese market for a long time.
There was a risk of being left behind here given how the Chinese market has shifted. But recent deep dives have seen the team take some direct exposure in the country. The strategy suffered a tough 2017 as tech names, an area in which the fund typically has an underweighting because of the team’s view of valuation and quality, enjoyed a stellar run.
But the fund has outperformed in 8 out of the last 10 calendar years and still has an entry fee levied on it. We see this as a proven choice in emerging markets, hence our Morningstar Analyst Rating of Silver.
Pimco’s GIS Global Bond fund has been steered by Andrew Balls since September 2014, along with co-managers Sachin Gupta and Lorenzo Pagani. The skilled trio takes cues from Pimco's top-down views to construct the portfolio and pays close attention to relative valuations when determining sector and country exposure. The lion’s share of the fund is typically devoted to government debt from the US, eurozone, and Japan, although the sector and regional weights can shift significantly over short periods.
Inroads into areas such as higher yielding corporates, US mortgages and European securitised debt, have been made to good effect. Balls has a good deal of experience running global and European bond mandates, backed by significant analytical resources and a sound process. This has allowed the fund to overcome the handicap of its high fees over time, supporting a Morningstar Analyst Rating of Bronze.
Martin Lau has managed the First State Asia Focus fund since launch in 2015. This is domiciled in the UK and is run in a similar fashion to a vehicle domiciled in Ireland that he’s managed for more than a decade. More broadly though, he’s been running money for 22 years with impressive returns across his Greater China and Asian equity mandates.
He’s well-supported by an adept team of 18 and we like that they have a long-term focus. The team has also been ramping up its research capability in onshore Chinese equities where the landscape is quickly evolving. Lau and his team apply a tried and-tested bottom-up stock-selection process, which looks for quality companies that deliver sustainable growth at attractive valuations.
There’s low turnover and many traits we value, giving us confidence that this newer strategy can strongly outperform over the market cycle. It therefore holds the top Morningstar Analyst Rating of Gold.
