First State will offer UK investors access to three Irish variable capital company funds through a new sterling share class in the First State global umbrella fund.
Changes in the definition of 'offshore fund' were introduced by the UK Finance Act in July this year, which allows individual sub-funds of umbrella funds and share classes to be granted UK distributor status in their own right. Previously, UK distributor status could be granted only on the umbrella fund, which meant all sub-funds and share classes had to meet the qualification criteria, which includes minimum levels of distribution to income investors. This new distribution share classes allow income to be distributed twice a year and this can be paid to investors or reinvested.
One of the funds, the First State Asian growth fund is managed by Alistair Thompson. Thompson joined First State in January 2003 as senior portfolio manager for Asia Pacific equities. Previously, he spent nine years at Edinburgh Fund Managers and has also worked for CIM Fund Managers.
Thompson will aim to exploit inefficiencies in Asian markets at sensible prices. He will take a bottom-up approach to stock selection and although politics, currencies and industries will be considered, these will not be used as a starting point in deciding where to invest. The fund will invest in good quality companies, with proven management, transparent accounting policies and strong balance sheets.
Many companies in Asia are at an early stage of development, so the growth potential is likely to be higher than in the West. Corporate restructuring has been taking place and companies are more transparent, making it easier for foreign investors to see how the companies are run.
However, there are concerns about the region's ability to sustain growth and anticipated interest rate rises in areas such as China could have a negative impact.