- The Asian equities team at Aberdeen remains experienced and well-resourced
- There's been some improvement in performance over the past year
- We think the fund's a good way to get broad exposure to Asian companies over the long run
We think experience counts for a lot when it comes to investing. The Aberdeen Asian equities team have it in spades. It’s one of the reasons we rate their Asia Pacific Equity Fund.
Hugh Young's been an integral member of the team since the fund's launch in 1987. We recently caught up with him and we're encouraged to hear he's still involved in running the fund alongside the wider team.
We also spoke with the team last year when they told us about some small changes to their investment process. It's still early days but, after a few years of weaker performance, it's good to see a recent improvement. We're also pleased the team has settled after a merger between Aberdeen Asset Management and Standard Life Investments in 2017.
The team's shown an ability to pick some of the best-performing Asian companies in the past and we think this fund has the potential to do well in future. Our positive outlook means the fund's currently on the Wealth 50 list of our favourite funds.
What a difference a year makes
2018 was an eventful year for Asian stock markets. A US/China trade war, sanctions against countries such as Russia and Iran, and rising interest rates in the US contributed to the market jitters.
We normally expect Aberdeen Asia Pacific Equity to hold up better when markets are weaker, because of its focus on more stable, larger companies. This is exactly what happened last year.
Markets have since rebounded in 2019, and over the past year the fund's grown 4.8%* compared with 4.0% for the broader Asian stock market. Past performance isn't a guide to future returns.
|Annual percentage growth|
| Mar 14 -
| Mar 15 -
| Mar 16 -
| Mar 17 -
| Mar 18 -
|Aberdeen Asia Pacific Equity||16.1%||-14.2%||37.2%||5.5%||4.8%|
|FTSE AW Asia Pacific ex Japan||20.0%||-7.8%||36.8%||6.0%||4.0%|
|IA Asia Pacific ex Japan||19.5%||-7.4%||35.4%||6.5%||3.9%|
Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2019.
Some investments in China and Hong Kong helped performance. Shares in AIA recently rose after the insurance group got approval to carry out business in three more mainland Chinese cities. Companies including China Resources Land, China Mobile and Hong Kong Exchanges & Clearing also did well.
The team's also increased the fund's overall exposure to China, particularly China A-shares (the shares of mainland China-based companies). They're now easier for foreign investors to buy and sell than they've been in the past. They tend to be domestically focused, so Hugh Young and his team think they're a great way to take advantage of growing consumption in China. Please note the fund's investment in emerging markets, like China, adds risk.
The team's added some other new investments as well, including Australia-based Cochlear, a global leader in hearing loss implants. They think the company's commitment to investing in areas like technology and product innovation will give it an edge over the competition over the long term.
Investors are currently paying close attention to global political issues and the risk of an economic slowdown. It means markets could remain volatile throughout the year.
But Hugh Young thinks there are positives too. He thinks there’s a reasonable amount of value on offer in Asian markets at the moment. And he expects to see companies grow their earnings at a modest pace, which could ultimately support share prices.
Many Asian companies are also run in a more prudent way than in the past. So he thinks they could be in a better place to hold up and perform well over the long run. It doesn't mean they'll be completely immune from any setbacks as there are no guarantees.