Exposure to Asia Pacific equities was reduced across all three Adviser Fund Indices at the last rebalancing in November. The reduction was 16.61 per cent in the Aggressive AFI, 18.75 per cent in the Balanced AFI and 10.82 per cent in the Cautious AFI.
The weighting in the Investment Management Association’s Asia Pacific ex Japan sector following the rebalancing was 5.2 per cent in the Aggressive AFI, 2.5 per cent in the Balanced AFI and 0.4 per cent in the Cautious AFI.
Six Asia Pacific ex Japan funds appear in the Aggressive AFI, with five in the Balanced and two in the Cautious AFIs.
Thinc Destini investment director Ian Shipway has exposure to the sector in his Aggressive portfolio with the 880m First State Asia Pacific leaders fund managed by Angus Tulloch. Since launch in December 2003, the fund has returned 79.5 per cent compared with the MSCI AC Asia Pacific ex Japan index return of 77.8 per cent, according to Lipper.
Shipway says: “We are keen on the Asia Pacific region but we do not take too many tactical calls. Over the short term it is very sentiment driven. We have pretty defined strategic allocations. Rather than tactically raising allocations, we will let the market do it for us. If confidence drove the market higher, we would trim holdings.”
Shipway says he follows both the Aberdeen and First State Asia Pacific funds and likes the managers’ value bias.
“They are conscious of the embedded value of what they are buying. They are not so influenced by market sentiment or fashion. They are more value-biased,” he says.
Shipway says he will occasionally hold funds in the short term that focus more on the momentum and growth story.
John Monaghan, investment manager at Origen, holds the Aberdeen Asia Pacific fund in his Aggressive and Balanced AFI portfolios. The fund has an 8 per cent weighting in the Aggressive AFI and 4 per cent in the Balanced AFI.
Monaghan says: “The process underpinning the fund is strong. It is the underlying strategy of investing in quality companies with recognisable value.”
Shauna Bevan, at Charles Stanley, has no exposure to Asia Pacific ex Japan in any of the AFI portfolios. Internally, however, the group has a 15 per cent exposure via three Asia Pacific ex Japan funds.
Bevan says: “In general, we are very positive on the region. We think there is going to be a major rebalancing in global market dominance from the West to the East. How long that takes is anyone’s guess.
“Within our internal weighting, we have a 15 per cent exposure to Asia ex Japan. We hold two actively managed funds and one structured product.
“The fundamentals are very strong. There is a big shift away from being exporters towards more domestic consumption.”