First State will offer UK investors access to three Irish variable-capital company funds through a new sterling share class in its global umbrella fund.
Changes in the definition of offshore funds, introduced by the Finance Act in July, allow 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 to the umbrella fund, which meant all sub-funds and share classes had to meet the criteria. The new distribution share classes allow income to be distributed twice a year. 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 growth is potentially higher than in the West but this also increases risk. Corporate restructuring has been taking place across the region and companies are more transparent than they used to be, making it easier for foreign investors to see how companies are run.
However, there are concerns about Asia's ability to sustain growth while interest rate rises in areas such as China could slow down the growth which this fund is seeking to capture.