Asian markets are expected to remain volatile, given geopolitical uncertainties and shifts in monetary policy. Trade tensions between the US and China will weigh on investors’ minds. They will also be keeping a close watch on how major central banks will manage liquidity and currency fluctuations. That said, this environment should provide opportunities for talented active managers.
Largest Emerging Market Funds
The largest funds in the sector include a number with strong performance track records.
Stewart Investors Asia Pacific Leaders has been managed by David Gait from July 2016 following the retirement of Angus Tulloch. Gait is an experienced investor who joined the group in 1997 and has built an impressive track record on the Stewart Investors Asia Pacific Sustainability fund, which he has managed since 2005.
The approach builds upon the house style, which targets high-quality companies that offer predictable earnings growth, but emphasizes names that are able to benefit from the sustainable development of the countries in which they operate. The fund holds a Morningstar Analyst Rating of Silver.
Schroder ISF Asian Opportunities has recently seen a change in lead portfolio manager. Robin Parbrook relinquished his lead portfolio manager duties in December 2017 after having steered the fund since October 2010.
Toby Hudson has taken his place; he has 25 years of investment experience and had worked on this strategy via its various institutional mandates with Parbrook over the past decade. Hudson uses the same well-established, rigorous bottom-up stock selection process that focuses on quality and growth. The fund has a Morningstar Analyst Rating of Silver.
Investec GSF Asian Equity has been managed by Greg Kuhnert since 2005. Kuhnert uses Investec’s trademark process, based on the 4Factor model, a proprietary quantitative screen. The model assesses value, quality/strategy, earnings momentum, and share-price momentum.
The approach combines the objectivity of the 4Factor process with fundamental analysis and Kuhnert has been able to successfully execute the approach, which has led to strong risk-adjusted returns over the long-term. The fund is rated Silver by Morningstar.
Best Funds Over 3 Years
Top performers over the past three years include funds with a variety of different investment styles.
Invesco Asian has a strong record versus peers and the benchmark. It is managed by William Lam who officially became sole manager in May 2017, although he had co-managed the fund alongside Stuart Parks from April 2015 being responsible for stock selection and idea generation.
Stuart Parks, head of the Asian equities franchise at Invesco since 2004, is set to retire in July 2019. Although Parks has been responsible for providing macro input for the team’s portfolios, we don’t believe his departure should impact Invesco Asian significantly given its emphasis on bottom-up stock selection. The fund is rated Bronze by Morningstar.
Fidelity Asia Pacific Opportunities has been managed by Anthony Srom since its launch in 2014. The process applied here is best described as high-conviction and contrarian with no demonstrative style or market-capitalisation bias. The three key features are fundamentals, market sentiment and valuation.
When assessing fundamentals, the manager takes into consideration a firm’s financial strength, industry structure, management expertise, and accounting quality. The portfolio tends to have 25-35 names with wide latitude at the sector and country levels. The fund is rated Bronze by Morningstar.
JP Morgan Asia Growth benefits from veteran portfolio managers Joanna Kwok and Mark Davids, who each have over 20 years of investment experience. The deep resources of the Emerging-Markets and Asia-Pacific team at JPM provides the managers the support they need.
The process follows the same quality/growth bias as the firm’s equity-based strategies managed across the region. The team looks for structural growth ideas – firms with quality franchises, consistent earnings streams and solid returns on equity. The fund has a Morningstar Analyst Rating of Bronze.
A version of this article appeared in International Advisor magazine
