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Fund research

FSSA Asia Focus: January 2024 fund update

In this update, Investment Analyst Henry Ince shares our analysis on the manager, process, culture, ESG integration, cost, and performance of the FSSA Asia Focus fund.

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

  • FSSA has established a strong Asia franchise and built a talented team

  • We like the culture and philosophy at FSSA – the managers view themselves as stewards of investors' capital, looking after it as though it's their own

  • Martin Lau is a highly experienced investor and has a strong track record

  • This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits into a portfolio

FSSA Asia Focus seeks long-term capital growth by investing in high-quality companies from across the Asia Pacific region. This includes both higher-risk emerging markets like China and India and developed economies like Hong Kong and Singapore.

Their conservative investment approach means we would typically expect more stability in returns compared with some peers in the Asia Pacific sector. This means the fund could complement more adventurous Asian funds or form part of a globally diversified portfolio with a long-term outlook.


Martin Lau joined FSSA in 2002 and has been lead manager of this fund since launch in 2015. He’s a highly regarded Asian fund manager and has invested in the region for more than two decades. In that time, he's managed several funds that invest broadly across Asia, as well as those that focus specifically on China, an area he specialises in.

Lau is a humble fund manager and open about both, what has worked well and what hasn't in his funds. These are qualities we like. While we rate him highly, he isn't a one-man band.

He works closely alongside co-manager, Richard Jones who joined FSSA in 2010. He has over three decades of investment experience and has a strong track record investing in Asia. Both Lau and Jones manage other funds alongside this one, but given the overlap in approach and investable universe, we believe they can comfortably handle these responsibilities.

The managers are supported by a diverse team, all of whom follow the same investment philosophy. They all contribute investment ideas and provide important challenge before any investment is made.


Asia is a hub of innovation and home to some of the most exciting companies in the world. From consumer brands and banks to healthcare and automation, Martin Lau and his team believe there’s a treasure trove of opportunities for stock pickers.

FSSA’s philosophy centres around quality. The definition of quality is subjective but to Martin Lau and his team, they believe that the management team in charge is the most important aspect. That’s why they try to find companies run by reputable management teams that don't take unnecessary risks in the pursuit of short-term gains.

Their process hunts for companies that have the potential to grow earnings sustainably over the long run. This means they should have a competitive advantage that others struggle to replicate, such as a well-known brand or the ability to raise prices for their products without affecting demand from customers.

The managers take a bottom-up approach and are not afraid to express their conviction. As a result, the portfolio can look very different to their benchmark. For example, they invest more (known as being ‘overweight’) in India, Singapore, and Indonesia and less (‘underweight’) in Australia, South Korea, and Taiwan. The country they invest most in is China which accounts for 29% of the fund, marginally ahead of the benchmark weighting.

In terms of sectors, the fund maintains a meaningful position in the financial sector which currently makes up around 26% of its assets. Elsewhere the next largest sectors are technology and consumer discretionary at around 22% and 12% respectively.

When making any investment, the managers take a long-term view. Therefore, they don’t tend to make too many changes from year to year. They often sell shares in companies that have performed well and could have less room to grow in future and buy more shares in companies that have been weaker, but still have growth potential.

Over the past 12 months, the managers invested in Kasikornbank, a leading Thai bank at what they believe to be an attractive valuation. Tech Mahindra, the Indian technology company was also added to the portfolio. The managers believe the company is set to benefit from increased spending on digitisation. In contrast, they sold consumer staples business Vietnam Dairy Products which has struggled to keep pace with its competitors. Other sales included Taiwanese company, Realtek Semiconductor and Chinese shopping platform, Meituan Dianping.


We like the culture and philosophy that's been cultivated at First State Stewart Asia (FSSA, part of the broader First Sentier Investments group). The team is made up of investors dedicated to looking after clients' money as if it's their own.

FSSA places emphasis on recruiting and maintaining great people. Every manager and analyst advocates the team's overriding philosophy. At the same time, their individual personalities are allowed to shine, and they're encouraged to bring their own ideas to the table.

Lau is a Managing Partner of FSSA, so we think he's incentivised to ensure the business, including its funds and people, are successful. He looks after its team of analysts and fund managers, which means he can pass on his knowledge and experience. It also means he has additional responsibilities, but we're confident he spends most of his time focused on looking after his clients' money.

First Sentier Investments was acquired by Mitsubishi UFJ, a Japanese bank, in 2019. Takeovers can sometimes lead to disruption and corporate change, though positively FSSA remains an independent investment team.

Environmental, social and governance (ESG) integration

For the team at First Sentier, ESG considerations are much more than a label or box to be ticked. Taking these factors into account is a natural extension of the same investment process they’ve used for decades. The team’s philosophy is founded on stewardship – when they make an investment, they see themselves as part-owners of the business and want to make sure it’s run in a way that’ll benefit all shareholders.

ESG issues form a core part of this. For example, they don’t like companies that make reckless decisions in the pursuit of short-term gains, rather than focusing on longer term, more sustainable growth. A business shouldn’t exploit its workforce, take advantage of tax loopholes, or skirt around industry legislation. Importantly, it should cause little, if any, harm to the environment around it. First Sentier has made a firm-wide commitment not to invest in companies whose primary business is to make cigarettes (or other tobacco products), or controversial weapons.

The team also engages closely with company management. It helps them make sure management remain on track with sustainability issues and means they can encourage a change in behaviour if required. If they don’t think a business meets their standards, or is doing enough to address a problem, they won’t invest. They produce an annual Responsible Investment report, and a Stewardship report. These reports outline the firm’s voting record, provide engagement updates and case studies, and present other ESG-focused research.


This fund usually has an ongoing annual charge of 0.90%, but we've secured HL clients an ongoing saving of 0.15%. This means you pay a net ongoing charge of 0.75%.

The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of up to 0.45% per year also applies.


Martin Lau has built up a strong track record investing in Asia, especially within China where he’s been investing since 2002. Since this fund launched in August 2015, it’s returned 116.93%* versus 115.92% for the IA Asia excluding Japan fund. It’s also outperformed the regional benchmark. Past performance is not a guide to the future.

Lau and his team are conservative in the way they manage money and aim to limit losses in a falling market. Their patient investment approach and focus on quality companies has meant they’ve tended to hold up relatively well when markets have been rocky but have lagged when they’ve risen strongly.

However, this isn’t guaranteed, as the fund has experienced over the past year. During this period, the fund fell by 6.09%, versus a -0.14% return for the IA sector average. Both were behind the benchmark though which was marginally positive. Stock selection was a headwind for performance, particularly within China where China Mengniu Diary and e-commerce company were the biggest detractors. South Korean consumer goods business LG H&H was another notable underperformer.

We have recently met with the team and continue to believe they are sticking to their established process. While there may be bumps along the way, we have conviction in the fund managers’ ability to outperform over the long term. There are no guarantees and all investments will fall as well as rise in value, so you could get back less than you invest.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23

FSSA Asia Focus






IA Asia Pacific ex Japan






Past performance isn't a guide to future returns.
Source: *Lipper IM to 31/12/2023
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.
Written by
Henry Ince
Henry Ince
Investment Analyst

Henry is a member of our research team, having recently re-joined HL in 2023 after working in asset management for several years. His expertise is deployed writing insightful analysis across a range of sectors including the Asia & emerging market fund sectors.

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Article history
Published: 15th January 2024