- This fund has the backing of an experienced Asian equities team
- Changes have recently been made to the fund, which they believe could boost long-term growth
- The fund maintains its place on the Wealth 150
Aberdeen Asset Management is home to one of most experienced teams investing in Asian companies. They've been investing in the Asia Pacific region for more than three decades.
Even the most experienced active fund managers go through tougher times and the Asian equities team at Aberdeen is no exception. Their Aberdeen Asia Pacific Equity Fund has underperformed the broad Asian stock market in recent years, although please remember past performance is not a guide to future returns.
We recently spoke with the team to find out more about performance and how the fund is invested – they told us they've implemented a number of small changes to their research process. For example, the team's analysts now generate new and monitor existing investment ideas by looking at stocks across entire sectors, rather than within an individual country.
We favour managers who don't stray from their central investment philosophy, but we are encouraged when they are prepared to analyse their approach, learn from the past, and make small changes to improve the way they manage money.
There are no guarantees what impact this might have on the fund's future performance and we will continue to monitor the fund closely. The team have previously demonstrated an ability to pick some of Asia's strongest-performing stocks and, combined with their depth of experience, we feel the fund deserves its place on the Wealth 150 list of our favourite funds.
Asian stock markets were home to some of the world's best performing companies over the past year, although a small segment of the market drove much of these returns. A number of high-growth technology companies, including Tencent, Alibaba and Baidu, delivered exceptional returns.
The team at Aberdeen have generally avoided these larger Chinese internet businesses as they don’t tend to fulfil the quality characteristics or high levels of corporate governance they seek in a company. The fund therefore missed out on most of the gains made in this area of the market.
Over the past year the fund still delivered an attractive return of 13.2%*, although this is marginally behind the return of the broad Asian stock market. Please note the fund invests in emerging markets, which increases risk.
|Annual percentage growth|
| Feb 2013 -
| Feb 2014 -
| Feb 2015 -
| Feb 2016 -
| Feb 2017 -
|Aberdeen Asia Pacific Equity||-13.9%||17.0%||-16.8%||40.3%||13.2%|
|FTSE AW Asia Pacific ex Japan||-10.5%||18.7%||-11.8%||44.6%||13.4%|
Past performance is not a guide to the future. Source: Lipper IM* to 28/02/2018.
How has the portfolio changed?
The team invest for the long term, but they'll make changes to the fund when they spot better investment opportunities. They also review existing investments, and those that haven't previously made it into the fund, on an ongoing basis.
After reviewing the technology sector last year, the team added an investment in Tencent. They met the company's management team on several occasions and are comfortable the business is being run in the interests of all types of shareholder. Tencent generates high levels of cash and its size and strength makes it difficult for competitors to take market share. It has a dominant position in China's gaming market and is making strides in it social media network, WeChat.
Elsewhere, the fund maintains a large exposure to the financials sector (37%), but the team have changed some of the investments in this sector. They've focused more on companies they believe will benefit from increased demand for financial products and services from private consumers, rather than larger institutions.
A number of Singaporean banks were sold from the fund after benefiting from a period of strong performance. Ping An was added to the fund – the team view it as one of China's best insurance groups, supported by its technological expertise, a management team prepared to adapt to change, and its exposure to the steadily growing insurance market.
Going forwards the team remain focused on finding companies in good financial health, run by robust and trustworthy management teams. They'll only invest in a company when they can buy their shares at what they believe to be a price below their true worth.