Investment Universe, Process, Strategy and Benchmark – How does the Fund Manager invest? (ISIN: LU0084288249)
Fund Highlights• Invests primarily in Asian emerging market companies. • Disciplined, top-down country allocation process coupled with trend identification to drive bottom-up stock selection.
• Market-oriented, opportunistic approach without style and market capitalization biases.
• Trend identification highlights themes, sectors and individual stocks for investment
Investment policy
The Fund invests primarily in equity securities of Asian emerging markets companies, defined as companies having their registered office or principal operations in any of the countries domiciled or which exercise the preponderant part of their economic activities in China, South Korea, Taiwan, India, Malaysia, Indonesia, Thailand and the Philippines.
The Fund may invest on an ancillary basis in convertible bonds whose value is derived from the value of any of those equity securities. The Fund may also invest up to one-third of its total assets in money market instruments and time deposits or other types of securities than those described above.
On an ancillary basis, the Fund may use derivatives for hedging and investment purposes.
The Fund is actively managed. The Investment Manager may choose country weightings and stocks that are different from those of companies in countries listed above. The Reference Currency of the Fund is the U.S. dollar.
Absolute Asia Asset Management specializes in Asian (ex Japan) equities. The firm’s investment process is qualitative and based on fundamental research. Not style-biased, this approach provides flexibility to seek outstanding opportunities. The investment team runs a
concentrated portfolio with a thematic approach based on pivotal micro and macro trends that drive economies in the region.
- Headquarters Singapore
- Founded 1998
- Assets Under Management (Billion) U.S.$ 0.7/€ 0.6
(31/12/2011)
Fund manager Bill Sung has more than 20 years of outstanding success managing assets invested in Asia, particularly in China and Hong Kong. His thematic investment approach has been a key driver in achieving long-term capital appreciation in the fund’s portfolio, and his high-conviction stock picking philosophy has proven to be a consistent source of alpha.
Performance Review 2011
Bill Sung: “In the fourth quarter, the Fund underperformed its index by 1.08%. The Fund rose 2.19%, compared with the index’s increase of 3.27%. Stock selection effect was the main contributor to the underperformance while country allocation effect helped offset some of the impact.
In terms of country allocation, the Fund’s underweight position in the worst performing India market contributed the most, and the other countries also made some modest positive contributions. The stock selection effect was mainly driven by a negative contribution from China and Korea. The contribution from most other countries was small. Consumer stocks, particularly in North Asia, were behind the negative stock selection effects during the quarter. The underweight position in the outperforming technology sector did not help either.”
Market Environment 2011
“During the third quarter, Asian markets managed to eke out a small gain amidst a highly volatile market. Markets rebounded strongly initially but gave up most of the gains as the situation in the European sovereign debt crisis evolved. The coordinated effort by G3 central banks to supply liquidity helped stemmed fear. The quarter also witnessed the beginning of monetary policy easing in Asia, as lower inflation numbers gave room to central banks to cut rates and loosen policy. China cut the reserve ratio requirement for the first time in two years, while Indonesia and Thailand cut rates.
Among emerging Asian markets, India was the worst performer, followed by Taiwan, while Thailand, Malaysia and China were among the best performers during the quarter. India continued to grapple with stubbornly high inflation while Taiwan was besieged with pre-election uncertainty as a win by the opposition party could potentially derail the warming cross straits relationship.
China and ASEAN countries performed well as central banks relaxed their earlier tightening stance. Diminished concerns about a hard landing in China also help boosted sentiment.”
Performance 2012 - Year-to-Date
This bar chart above shows the performance of the R/A(USD) Share Class in its currency of quotation, net of ongoing charges and excluding entry or exit charges.
Bill Sung: “In the first quarter, the Fund underperformed the index by 1.7%. The Fund rose 11.63%, compared with the index’s increase of 13.36%. Both country allocation effect and stock selection effect were negative.
In terms of country allocation, the Fund’s underweight positions in India and overweight position in China were the main contributors to the negative effect. The stock selection effect was mainly driven by a negative contribution from China and India, but partially offset by positive contribution from Taiwan.”
Market Environment - 2012
“During the first quarter, Asian markets staged a strong rebound on optimism that a Lehman-type crisis in Europe was unlikely to happen and better economic data from the U.S. and China helped alleviate fears of an economic hard landing. The announcement by the Chinese government in March of a lower GDP growth target, however, reined in the exuberance somewhat.
Among emerging Asian markets, India, Thailand and the Philippines were among the best performers, while Indonesia, Malaysia and China were among the worst performers during the quarter. India surged on expectation of monetary easing as inflation eased. Thailand benefited from post-flood recovery works, while the Philippines outperformed on optimism of a new investment cycle for the country. China performed well initially but was sold off after Wen Jiabao’s announcement that the pace of China’s growth would slow modestly in 2012. Indonesia’s imminent fuel subsidy cut and Malaysia’s potential election this year were an overhang in the market.”
Outlook - 2012
Bill Sung: “Our positive outlook on the economic environment Asia remains intact and we anticipate that it will translate into better market performance as the year progresses. The fragile economic recovery in the U.S., assuming that it continues, will be a plus, particularly for Asian exports, which are likely to be better than we expected. Our main concern continues to be the euro-zone financial crisis, which, while showing some signs of improvement, will likely be an ongoing source of anxiety and volatility for stock markets, including those in Asia.”
