3 Asia Funds Which Beat the Market

Investing in Asian equities can be a bumpy ride. Morningstar fund analyst Simon Dorricott higlights three funds which beat the market throughout the cycle

Emma Wall 22 June, 2015 | 4:21PM
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Emma Wall: Hello and welcome to the Morningstar Series "Ask the Expert". I'm Emma Wall and I am joined today by Morningstar Fund Analyst Simon Dorricott.

Hello Simon.

Simon Dorricott: Hi.

Wall: So we're here today to talk about Asia funds. And in particular those who have managers that are really good at managing Asian equities through the cycle, because it kind of quite a volatile place to invest. So what's the first fund today?

Dorricott: Well, the first fund that we are going to talk about today is the First State offering, Asia Pacific Leaders which is run by Angus Tulloch.

Wall: And First State are renowned along with Aberdeen for their expertise in the emerging markets and in Asian equities. What do we like about this fund?

Dorricott: Well, it's got very established process as you allude to. Very much focusing on quality, in terms of sustainability of returns and in terms of management being very much shareholder friendly and that sort of quality aspect is being honoring over time. You can see it in portfolio quite clearly and it's obviously served investors well if you look at the performance of that product.

Wall: And Angus Tulloch who the runs the fund has been running money in this area for decades. Which is always a plus when you are looking at these fund managers.

Dorricott: Indeed, absolutely right. And he is very much involved in developing the process that's used on the fund today.

Wall: And the fund is gold rated. There are some changes going on at the top. But this doesn’t affect whether or not the fund itself is run well.

Dorricott: Exactly. I mean there are changes going on as you say at the company level. So First State Stewart is planning to split into two from the start of July. This product itself is going to be managed by Stewart investors and Angus Tulloch is going to remain the fund manager so we have continuity there. There is a little bit of change in terms of loss of resource because they are splitting absolutely in two and there'll be no contact with the other side of the group First State Stewart Asia after July 1. But still Angus, he is able to draw on reasonably large team of 21 investors.

Wall: Great and the second fund I believe is an Investec one.

Dorricott: Indeed, yes. So Investec offer an Asia product that’s run by Greg Kuhnert. He's been managing the fund since 2005. He's produced a very good track record over that period of time and has produced very consistent returns actually over that period.

Wall: I believe he employs sort of a four tier process to look for potential equity holdings for the fund.

Dorricott: Indeed. So the product is very much reliant on the four factor process that Investec have which is a quantitative process. That ranks a huge number of stocks and forms the basis of what Greg does in the fund. There is also qualitative overlay that he conducts research alongside his assistant Charlie Linton and they also draw on the global analyst of the group as well.

But primarily the driver is that four factor process and that's producing very good results. It's particularly effective within Asia. But that being said, we are quite comfortable that we see evidence of Greg adding value over and above that in terms of stock selection and portfolio construction as well.

Wall: And then the third and final fund is Matthew Dobbs at Schroders isn’t it?

Dorricott: Exactly. So he runs a reasonably high conviction portfolio Asian Alpha Plus. He's a highly experienced manager, has over 30 years in the business and he's been managing money to well using a very similar process to there since 1995 on an investment trust.

Wall: A couple of these managers that we’ve talked about are based in the U.K. it does not put them at a disadvantage or is Matthew sort of supported by a big team in Asia that’s feeding him on the ground news.

Dorricott: Exactly. As you say he's London based. He works alongside Richard Sennitt who's another experienced investor who is London based. So he has over 20 years. So there are the two of them there who can bounce ideas off each other. But in terms of research and stock research they very much reliant on a very large team that’s based in the region.

I think they have over 30, 35 investment professionals based in seven offices across the region and they are feeding stock ideas through to these portfolio managers based in London and it's Dobbs' job to really sift through those ideas and find those where the analyst and himself have the highest conviction and build his portfolio primarily based on those ideas.

Wall: Simon, thank you very much.

Dorricott: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Ninety One Asia Pacific Franchise A Acc£796.15 GBP-1.30Rating
Schroder Asian Alpha Plus A Acc1.94 GBP-1.31Rating
Stewart Inv APAC Ldrs Sstby A GBP Acc8.93 GBP-1.10Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar