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Trust Insider: how this unheralded trust beat the China bear

by James Carthew on Mar 25, 2014 at 07:30

Trust Insider: how this unheralded trust beat the China bear

After many years as the world’s favourite place to invest, Asia now finds itself unloved. An investment in the MSCI Asia Pacific ex Japan Index would still have made you money over the past three years but only just, and over the past year you would have lost 12.1%.

Discounts on Asian funds are wider than usual (bucking the trend for most of the investment company sector) and a panel of economists at the AIC’s recent conference for directors was decidedly downbeat about the region – though to be fair, they were pretty negative about the outlook for just about everywhere.

I am not sure the region is so unloved yet that you should be thinking about picking up bargains but I am wondering how far off that time is.

A stand out performer

The Asia Pacific income funds and smaller companies funds have fared best over the past three years but, among the large cap growth funds, Pacific Assets (PA) stands out as the best performer by some margin (up by almost 25% in net asset value terms and 32% in share price terms). I like this trust and its approach to managing money is genuinely different from other Asian funds.

PA has been managed by David Gait at First State Stewart since July 2010 (when the management contract was transferred to them from F&C).

The investment objective is much like those of the other funds in its peer group – long-term capital growth through investment in selected companies in the Asia Pacific region and the Indian sub-continent, excluding Japan, Australia and New Zealand.

But be aware, when comparing funds in the peer group, their definition of what constitutes Asia does vary and PA is allowed to invest up to 20% of its assets in countries other than those mentioned above (fair enough, as quite a few companies whose operations are primarily in Asia are domiciled elsewhere). 

The board has set some risk limits: its largest investment should not exceed 7.5% of total assets at the time of investment; use of derivatives is allowed but with prior board approval and within agreed limits.

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