First State Asia Pacific Leaders fund
Andy Parsons, head of investment research at The Share Centre, looks at the investment opportunities Asia offers investors and highlights the First State Asia Pacific Leaders fund.
"Since the turn of the century Asia as a region has increased in importance for investors, as the lure of potential higher returns is hard to ignore. However, it is not for the fainthearted. Historically poor communication, regulation, lack of corporate governance and even corruption are just some of the difficulties the region has faced. However, changes are being made as the region faces closer scrutiny and investment.
"We firmly believe that Asia will continue to prosper over the next three to five years as the growing importance of the region and China intensifies. Whilst in the short term much of the media focus has centred on a slowing Chinese economy, it is the longer term demographic and geographical changes that investors should consider.
"Investors should appreciate that funds exposed to the Asia Pacific region are likely to experience potential periods of extreme volatility and therefore due to this nature and the development of their financial markets it is a higher risk investment.
"The First State Asia Pacific Leaders fund is an ideal way of investing within this region as its managers and analysts are involved with the participants of these markets on a daily basis. The fund is co-managed by Angus Tulloch and Alistair Thompson, who are ably supported by a team of 19 emerging market investment managers based in Hong Kong, Singapore and Edinburgh.
"The fund invests in approximately 60 companies, favouring mid and large caps, which are generally held for the longer term, thereby reducing portfolio turnover. Angus and Alistair prefer to invest in companies that have a strong franchise, high barriers to entry, predictable and sustainable earnings growth, financial strength, good corporate governance and that they believe are undervalued. Considerations to the broader economic environment and company meetings are also key to their decision making process.
"The fund has a stellar track record in terms of performance and consistency. It is ranked first quartile on a cumulative basis over five years, three years, one year, six months, three months and year to date (as at 20 September 2012). Over five years the fund has returned 62.98% compared to a sector average of 19.15%. Over three years it has again outperformed returning 37.20% compared to a sector average of 20.42%. Year to date the return is 13.10%, compared to a sector average of 8.47%."