Over the last few months as interest in the US equity market wanes, the demand for emerging markets has increased with many flows going towards Asia-focused funds.
Reforms in infrastructure, monetary policy as well as rising affluence in Asia looks set to boost corporate earnings and investor interest.
For those investors looking to take advantage of companies that are in early stages of their development, small-and mid-cap funds could be a potential way of playing Asian growth.
In this analysis, Citywire Americas takes a look at the best performing managers in the Asia Pacific Small & Medium equity sector over the past five years.
The MSCI Asia Pacific ex Japan Small Cap index has returned 34.8% during this time period.
Of the 44 fund managers Citywire tracks in this category, the average manager has outperformed the benchmark, returning 56.4% over a three year period ending in June 2017. The best very managers have doubled this.
We’ve highlighted the top three performing fund managers below.
3. Raymond Wong, UBS Asset Management
Fund: UBS (Lux) - Asian Smaller Companies fund
Five-year total return: 81.3%
Singapore-based Raymond Wong has been managing the UBS Asian Smaller Companies fund for just over five years, since April 2012.
The Citywire AA-rated manager aims to keep holdings diversified across countries and sectors, with no one stock representing more than 4% of the portfolio.
A fourth of the fund is allocated to China, with one if its largest holdings being Chinese tutoring services provider TAL Education Group, according to the fund’s June factsheet.
It is also overweight consumer discretionary and consumer staples versus its appointed benchmark, the MSCI All Country Asia ex Japan Small & Mid Caps index.
2. Elizabeth Soon, PineBridge Investments
Five-year total return: 108.1%
Citywire AAA-rated manager Elizabeth Soon has been managing this high-returning fund since April 2006 and has been consistently beating her peers over the last five years.
The fund’s most recent outperformance is down to Chinese industrial names such as Sinotruk, Pacific Basin and Anhui Conch, according to her latest commentary. She added that inflows during June had caused the fund’s cash level to be elevated, which detracted from performance as her team looked to deploy it.
In June, the Hong Kong-based manager reduced the fund’s position to AAC Technologies and Sunny Optical due to rising valuations.
1. Elina Fung & Alex Kwan, HSBC Global Asset Management
Five-year total return: 121.8%
At the top of the list, returning an impressive 121.8% over five years, is Citywire AAA-rated duo Elina Fung and Alex Kwan.
The two look to hold 60 to 90 profitable firms with below-average valuations in their $819 million strategy.
In June, the firm was boosted by Taiwanese-listed Eclat Textlies, which saw shares surge due to growth for its ‘innovative sporting apparel’ as well as auto-dealers China Yongda and Zhongsheng, which saw strong sales.
The fund is also overweight consumer discretionary, materials and industrials.