Jane Andrews: my pick of Asian growth stocks

Calling the direction of the yen is too difficult, says fund manager Jane Andrews, who questions just how committed the Bank of Japan is to reducing the value of its currency.

The strong yen is having a profound effect on the global competitiveness of corporate Japan, and despite initially showing signs of weakening this year, that trend has reversed in recent weeks.

This has not stopped Andrews adding Japan exposure to the Citywire Selection Smith & Williamson Far Eastern Growth Trust recently, with her stake now at 37%, up from 33.7% at the end of March. But rather than focus on those industries and companies that will benefit from a falling yen, she is investing in business looking to benefit from growth in the region.

Asian growth stories

Andrews recently added a position in credit card company Aeon Credit Service, which has a presence in many key countries in the region, including Malaysia, Indonesia, Taiwan, Hong Kong and Singapore. The firm recently became the first company to offer credit directly to the Chinese.

She has also been bulking up her position in Family Mart convenience stores, which is looking to break into Indonesia, where the roll-out of convenience stores is still at an early stage.

Other Japanese holdings include Hitachi and Disco, a small Japanese technology stock that has benefited from the growth of smartphones and the potentially lucrative LED lighting market.

Newcrest sold

Elsewhere she has completely sold off gold miner Newcrest Mining, which has disappointed investors with lower-than-expected production from some of its mines, as well as a slower-than-expected integration following its acquisition of smaller rival Lihir.

Proceeds from the Newcrest sale were used to increase her longstanding holding in fellow Australian gold miner Regis Resources. The move makes the stock her primary gold play, as she feels the low-cost producer has continued to perform well.

Risk levels increased

Andrews has also rotated her portfolio to be more balanced and less risk averse, while at the same time focusing on regional businesses that are less susceptible to changes in Western sentiment.

‘I’ve been running the fund too defensively, and missed out on some of the early-year rally,' she said.

'But with markets as they are at the moment, shifting from risk aversion to optimism, from being defensive to cyclical, I have decided to raise our beta slightly and build a more balanced portfolio,’ she said, her reference to 'beta' meaning the market return as opposed to the 'alpha' or added value that active managers attempt to achieve.

This includes a 2.7% stake in Taiwan Semiconductor Manufacturing Company, the overall largest position in the fund. Andrews also has a position in Hon Hai Precision, the trading name for Foxconn, which is a Taiwanese company heavily involved in the production of the Apple iPhone and iPad.