Asia ex-Japan Equity

Paying the right price relative to quality

Reasons to invest

Price-to-quality

We are price-conscious investors with a focus on buying stocks that are attractively priced relative to value, across the quality spectrum.

Contrarian

We are attracted to stocks that are temporarily out of favour.

Asymmetric payoff

We seek opportunities where we will make more if we are proven right than lose if proven wrong.

ESG integration

We incorporate ESG and engagement into our investment process, drawing on the resources of EOS at Federated Hermes, our leading stewardship team.

Track record

The Strategy ranks among the best performing Asian equity funds since inception, but has a significantly different composition to its peers1.
1 Source: Morningstar, data as of end of June 2021 (see footnote 2)

Strategy overview

Jonathan Pines

We seek an asymmetric return profile, and pay particular attention to the risk of downside in absolute terms

Jonathan Pines, CFA
- Portfolio Manager, Asia ex-Japan

Why Asia ex-Japan Equity?

We look for companies priced attractively relative to value. We have a value bias, but invest in both traditionally defined ‘value’ and ‘growth’ parts of the market – as quality companies at higher multiples can also represent good value and can become out of favour. The portfolio exhibits significantly lower price-to-earnings and price-to-book multiples, and a higher dividend yield, than the index.

We are contrarian investors. Often the stocks we buy are attractively priced because news flow has recently been negative and the stocks have underperformed. We stand alone in terms of style versus our top 10 peers by assets under management. As a result, we have a very low correlation with the rest of the fund market.2

Asia ex-Japan correlation with the rest of the fund market


2Source: Morningstar, data as of end of June 2021 due to 3 months lag on holdings disclosure. Coloured dots represent styles of peers as determined by Morningstar. Peer group selected based on top 10 AUM funds in the Asia ex-Japan Morningstar category.

We aim to invest so that the upside/downside of a position is asymmetric: the upside far outweighing the potential downside. Our larger positions tend to be those with lower risk – we define risk as the permanent loss of capital rather than volatility or divergence from the benchmark.

How we invest

Fundamental, bottom-up process
Risk aware
ESG integration

Investment philosophy

We believe alpha can best be generated by bottom-up analysis: buying companies that are attractively priced relative to their quality.

Investment process

We apply a liquidity and size screen, and filter for companies trading cheaper than expected relative to their quality, reducing the universe of 18,000 stocks down to around 250.

We study financial statements, write reports and project financials. We hold discussions with management, and incorporate ESG analysis. This process filters down our investable companies to circa 100 stocks.

We select 45-60 mispriced stocks, sizing the positions by considering risk. We have an 18-24-month average holding period. We sell when a stock reaches its intrinsic value, our assessment changes or we find a better idea. 

Investment philosophy

Team

6052, 6091
Jonathan Pines

Jonathan Pines, CFA

Co-portfolio manager

Sandy Pei

Sandy Pei, CFA

Co-portfolio manager

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Our Purpose

To deliver Sustainable Wealth Creation

Like all our investment capabilities, Federated Hermes Asia ex-Japan Equity aims to deliver Sustainable Wealth Creation: the generation of wealth through investments that enrich investors, society and the environment over the long term.

Our business provides three equally powerful pathways to achieving this aim. Federated Hermes Asia ex-Japan Equity features in the Active ESG route.

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Responsible, active investing for long-term performance.

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Asia ex-Japan Equity
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Thematic and values-based approaches for sustainable outcomes.

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Mission-led investment strategies to create positive impact.