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First State Asia Focus – responsible stewardship in a fast-growing region

The team behind First State Asia Focus has considered ESG factors in their investment approach for many years. In their search for sustainable growth, they view themselves as long-term owners of a business.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Stewardship, sustainability, ethical, or responsible investment. There's more than one way to incorporate values into your investment portfolio.

Some fund managers, like Kames’ Audrey Ryan, exclude certain sectors completely. Others use a less restrictive approach.

For Martin Lau and the rest of the team behind the First State Asia Focus Fund, environmental, social and governance 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.

This article is not advice. If you’re unsure of the suitability of an investment for your circumstances, please seek advice.

Good stewardship, good returns?

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 they're run in a way that'll benefit all shareholders. ESG (environmental, social and governance) 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.

The team also engages closely with company management. It helps them make sure management remain on track with sustainability issues, or encourage them to change their behaviour if needed. If they don't think a business meets their standards, or is doing enough to address a particular problem, then they won't invest.

Overall the team believes that, as investors, we cannot ignore business' impact on society and the environment – and good governance is the foundation on which great companies can be built.

Company in focus – Vitasoy

Vitasoy originally launched in 1940 as a manufacturer of a nutritious, low-cost alternative to milk, and it's since grown significantly. It hasn’t always been smooth sailing, but the team at First State are impressed with how company management has reacted to challenges and corrected their processes over time.

In recent years, Vitasoy has set more ambitious targets in terms of nutritional, sugar and fat content; and energy, water and waste. In 2018, the team engaged with the company on issues such as a formalised packaging policy that included plastics. It's still early days on some of these issues, but the team are excited about what's to come.

Why we rate First State

We like the culture and philosophy that's been cultivated at First State. They care about the impact their investments have on the world around us, and invest clients’ money as if it were their own.

This fund invests in companies based across Asia – from India to Taiwan and Singapore to Hong Kong. So the fund combines exposure to some of the fastest-growing regions of the world with a focus on companies that put social and governance issues at the heart of what they do.

We think this is a great combination.

Not only that, it means you’re investing with some of the most experienced investors in Asian companies. The team has built an exceptional track record and shown an ability to invest in companies with great long-term prospects. Past performance isn’t a guide to the future though and investments in emerging markets are higher risk and can rise and fall in value, so a long-term outlook is essential.

More about First State Asia Focus, including charges

First State Asia Focus Key Investor Information

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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