T Rowe Price has unveiled a second Asian equities fund to complement its existing product in the space.
The new Asian Opportunities Equity fund will be managed by Eric Moffett to focus on companies with highly predictable earnings, whereas the firm’s Asian ex-Japan Equity fund concentrates on those exhibiting earnings growth.
That £550 million fund, managed by Anh Lu and Ernest Yeung, has returned 120% over the past five years, top decile in its sector where the average fund has generated 78% through the same period.
Moffett has 13 years of investment experience, with six at T Rowe Price where he has been associate director of equity research for Asia ex-Japan. He will supported on the fund by a team of 14 equity analysts across the firm’s Hong Kong and Singapore offices.
The fund will build a portfolio of between 40 and 70 high-quality Asian stocks, with a mandate excluding Japan.
‘As Asia moves into a slower-growth environment, it is increasingly important that companies generate returns above their cost of capital,’ commented Moffett.
‘The quality of companies in Asia is gradually improving, as is their ability to effectively allocate capital. But many investors in Asian stocks are short-term focused. As they look for stocks that could double next month, they frequently overlook companies that can steadily compound over time. And that’s where we want to focus.’
Moffett concluded: 'It's true that Asian markets face near-term challenges as they grow and develop. Yet growth rates in the region are still high by global standards, and today many stocks across the region are already priced for a sharp slowdown.
'There’s often little differentiation between low-quality companies and the companies that can endure and take market share during difficult market environments.'
According to the fund’s key investor information document, it will have an ongoing charges ratio of 2.07%.