Veritas Asian and Baillie Gifford Pacific are some of the Asian equity funds that managed to stay at the top of their sector in the last year’s bull market and the bear conditions of 2020, according to FE fundinfo data.
Like markets around the globe, Asia has given investors some very different conditions to navigate in recent years. While 2019 was something of a bull year with the MSCI AC Asia Pacific ex Japan index making a 14.56 per cent total return, 2020 so far has seen coronavirus cause a 8.30 per cent slump.
With this in mind, Trustnet looked across the IA Asia Pacific Excluding Japan sector to see if any of its 107 members have managed to achieve top-quartile returns in both of these very different years.
Of the 26 funds that made top-quartile total returns in 2019, 15 were able to hold onto this ranking in 2020 so far. They can be seen in the table below, ranked by their performance in 2020.
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Source: FE Analytics
At the top is Veritas Asian, which is down 2.97 per cent this year and gained 25.44 per cent in 2019. It is also top quartile over three and five years.
Managed by FE fundinfo Alpha Manager Ezra Sun, the $2.8bn fund looks for stock-specific opportunities among five thematic long-term growth ideas.
Companies like Alibaba, Tencent and Samsung are found in the fund’s 10 largest holdings, which is a familiar theme amongst the sector’s top performers. Domestic consumption and the increasing influence of Chinese technology are seen as key investment opportunities by Asian equity funds.
The FE Invest team, which has Veritas Asia on its Approved List, said: “The strategy has been executing well, and was backed by a solid track record. After all, Sun is a person who is willing to evolve from his lesson learnt in order to continuously improve his investment process.”
Close to half of the portfolio is in Chinese equities, although 15 per cent is held in stocks from developed-market Australia. This is intended to add exposure strong market liquidity, corporate governance and rule of law in a region that has a lot of emerging markets.
In second place is Ninety One Asia Pacific Franchise, which has lost 3.54 per cent in 2020 and made 25.26 in 2019. It’s also top quartile in the sector over three and five years.
Manager Charlie Dutton seeks out high-quality companies that have sustainably high levels of return on invested capital and free cash flow, typically those associated with strong brands o franchises.
The fund has 47.49 per cent in emerging equities and contains to 10 holdings in the Asian technology giants consistent among these high achievers.
Performance of funds vs sector
Source: FE Analytics
The £719m Baillie Gifford Pacific fund, managed by Roderick Snell and Ewan Markson-Brown, appear in third place on the list with a loss of 3.68 per cent this year and a 25.03 per cent total return in 2019.
Snell and Markson-Brown are bottom-up growth investors who look for companies with the potential to double their share price over the next five years. They prefer companies with strong management teams who take a long-term perspective when running the business, with top holdings including Alibaba, Taiwan Semiconductor Manufacturing Company and Tencent.
The highest return from IA Asia Pacific Excluding Japan sector in 2019 came from GAM Star Asian Equity, which is managed by Robert Mumford. It made 29.3 per cent last year, although its loss of 7.65 per cent in 2020 is higher than the funds mentioned above – but still a top-quartile result.
Performance of fund vs sector
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Source: FE Analytics
The fund has 44 per cent of its portfolio in China, with information technology, financials and consumer discretionary being the biggest sector allocations. Samsung, Alibaba and Tencent are its top three holdings.