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Aiming to achieve long-term capital appreciation by investing in companies in or deriving substantial revenues from emerging countries in Asia.

Our biggest positions are in companies we believe are least likely to lose money in absolute terms.

Jonathan Pines

Portfolio Manager

Asymetric payoff

Our larger positions tend to be those with a lower potential loss, meaning we aim to outperform in falling markets.


We focus on buying stocks that are attractively priced, an approach we consider suitable to most market conditions.


As contrarian investors, often the stocks we buy are attractively priced because of negative news or underperfomance.

Track Record

We rank among the best performing Asian equity strategies, but differ significantly from our peers.1

Investment approach

Wheat from the chaff: we screen extensively to identify stocks priced attractively relative to their quality. Price to book and the five-year average return on assets are particularly important as we identify a stock’s divergence from its long-term fair value.

Financial statement analysis: we scrutinise company statements, then analyse the company in depth and speak with management.

Taking position: the size of our position is informed by our risk assessment. We manage risk at the stock and portfolio level. Typical holding periods are 12 to 18 months.

  1. 1Since inception the Hermes Asia ex Japan Strategy has ranked in the top decile in the Mercer - Asia ex Japan Equity Peer Group. As at 30 September 2018. The inception date of the strategy is 1 January 2010. Past performance is not a reliable indicator of future results and targets are not guaranteed.


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In the land of the giants Jonathan Pines, Hermes Asia ex-Japan Equity Portfolio Manager at Hermes Investment Management, looks at driving forces behind the winners and losers of 2017 and what will likely drive performance in the year ahead. Last year was a strong one for our MSCI Asia ex Japan benchmark, which rose 40%. Despite this strength, its longer term performance lags most other global indices (as well as medium term earnings and net asset growth) and we consider it to remain attractively priced. What worked – and what didn’t for – for Asia ex-Japan stock pickers over the last year For many years, we have identified stable-earnings, dividend-paying quality companies as generally overvalued, because yield-starved investors chose them in preference to bonds offering miserly rates of interest, while paying inadequate attention to equity risk when valuing these types of companies. In the last year, these types of quality companies got so crushed on a relative basis that many former high-flying income funds are now underperforming – even on a three-year basis. Indeed, half of the 10 worst-performing Asia Pacific ex-Japan Funds in 2017 have the words ‘income’ or ‘yield’ in their name[1]. We believe that all narrowly focused, thematic and smart beta investment strategies will eventually suffer periods of underperformance – and should an adherent to such strategies outperform over the long-term, this would be purely fortuitous, with the strategy having had at least as great a chance of long-term underperformance.
Passive rise in Asia creating distortions for active managers to exploit To the casual observer, the emerging Asia region has witnessed a powerful return to investor favour over the past three years To 7 November 2017, in US dollars. However, beneath the surface of the broad market’s strong overall return of 33% over this period are some significant performance disparities – most notably across the capitalisation spectrum, according to Jonathan Pines, Asia Ex-Japan Portfolio Manager at Hermes Investment Management. The ten largest stocks in the region have seen an 88% share price spike. Weighted by market capitalization of the top 10 names, with the rise mainly attributable to the strong performance of Tencent (up 220% in US dollars), Samsung Electronics (146%), TSMC (106%) and Alibaba (64%), far exceeding the 16% rise for mid-caps and 11% rise for small caps. While the sharp rise of some mega-cap stocks, such as Alibaba, is justified by fundamentals – the broader outperformance of this segment of stocks, and even more particularly the underperformance of the mid cap segment, has been powered in part by a substantial net flow of passive investment into the region. While active managers need to sell across the market cap spectrum to meet redemption requests, the passive manager finds that she only needs to buy the larger cap names to efficiently achieve an acceptable degree of index replication. This is particularly the case for those Asian stocks that also form part of broader global indices.

Sales Contacts

Paul Voute,
Head of European Business Development