Reasons to invest
We seek an asymmetric return profile, and pay particular attention to the risk of downside in absolute terms
Why Asia ex-Japan Equity?
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
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
We believe alpha can best be generated by bottom-up analysis: buying companies that are attractively priced relative to their quality.
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.
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