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Stewart Investors Asia Pacific Leaders - a year in review

Kate Marshall | Mon 16 January 2017

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • Asian stock markets staged a recovery in 2016
  • The team’s conservative investment approach weighed on returns
  • We continue to hold the team in high regard; long-term performance remains impressive

Our view

David Gait, lead manager of the Stewart Investors Asia Pacific Leaders Fund, is a highly-experienced investor in Asian equities. He also has the support of a number of other talented portfolio managers in running this fund. We like their focus on high-quality companies with strong balance sheets and robust cash flows, run by trustworthy management teams. They only invest when they feel share prices are lower than a company’s true worth and with the intention of becoming long-term shareholders.

In our view, the fund represents an excellent choice for exposure to the Asia Pacific region and it features on the Wealth 150+ list of our favourite funds at the lowest ongoing charge (the Vantage charge of up to 0.45% p.a. also applies). Investors should note the fund invests in emerging markets and is a relatively concentrated portfolio of 44 stocks, which increases risk.

Market and portfolio review

Following a difficult 2015, Asian and emerging stock markets staged a recovery last year. A number of positive factors contributed to this, including fears over an economic slowdown in China easing and a rebound in commodity prices aiding resource-rich countries such as Australia. UK-based investors benefited further from the strength of Asian and emerging markets currencies against sterling.

A change in investor sentiment towards the region has seen the share prices of companies in more economically-sensitive areas of the market, such as financials and resource-related sectors, outperform more defensive areas, including healthcare and consumer goods.

David Gait and his team employ a conservative investment approach. They seek quality companies with more defensive characteristics, which they believe will prove resilient throughout a variety of market conditions. This tends to lead them away from some of the more economically-sensitive companies that performed strongly in 2016.

Greater exposure to the consumer goods, telecoms and healthcare sectors also proved a headwind last year, as did stock picking in technology companies, according to our analysis. Investments in India, which delivered a positive return but lagged the broader Asian market, also held back returns. A relatively high level of cash (currently 9.6%) has also weighed on returns over a period when stock markets on the whole have risen. While the fund delivered a positive return of 18.9%* last year, it lagged the wider Asian stock market’s return of 28.7%. Please note this is not a guide to how the fund will perform in future and all investments can rise and fall in value.

Annual Percentage Growth
Dec 11 -
Dec 12
Dec 12 -
Dec 13
Dec 13 -
Dec 14
Dec 14 -
Dec 15
Dec 15 -
Dec 16
Stewart Investors Asia Pacific Leaders 18.4 0.4 19.1 1.3 18.9
FTSE AW Asia Pacific ex Japan 17.5 1.3 10.0 -3.5 28.7

Past performance is not a guide to the future. Source: *Lipper IM to 30/12/2016

The fund performed in a way we would expect, however. The team’s cautious approach means we anticipate the fund to underperform a rapidly rising market, but hold up better during times of market weakness. The fund has also tended to be considerably less volatile than its peers and the approach has delivered exceptional long-term returns , although this should not be seen as a guide to future performance.

As long-term investors, few changes have been made to the portfolio over the past year, although new investments include Indian IT company Wipro and Nippon Paint, a Japanese business that derives a large portion of its revenues from one of China’s leading decorative paint companies. The team became less positive in their outlook for Singaporean banks due to some of their lending policies and an investment in DBS Group was sold.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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