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Men from Atlantis

Asian specialist Atlantis launched in 1994, with its three initial managers seeking greater investment flexibility than they had at previous employer Schroders.

Chief executive Peter Irving – who passed away in a boating accident three years ago – ran Korean assets while Tony Jordan focused on Asia ex-Japan and Ed Merner on Japan.

All three had raised significant assets while at Schroders, with Irving running a big amount of foreign freeflows on the Korean market, for example, and felt that this was impinging on their ability to perform.

They established Atlantis so they could control their own business, effectively working as autonomous units with a centralised support platform. As part of this devolved management structure, Atlantis has several investment offices in Asia, with the London operation covering sales, marketing, risk, compliance and general admin.

In practice, the heads of the various regional offices effectively run their own business and refer to the firm as a commune of fund managers. Each manager can also limit maximum assets under management to ensure that performance is not compromised, with Merner launching his initial Japanese product as an investment trust, for example.

These local offices allow the firm to maintain a strong bottom-up investment process driven by company visits and the managers remain bullish on ongoing opportunities across the Asian region.

At present, Atlantis has investment professionals based in Tokyo, Hong Kong, Shanghai, Seoul, Singapore and Mumbai. A major change came in 2002 when Yang Liu joined to build a China business and this now accounts for a large part of the company’s overall $2.9bn in assets under management.

Liu now runs one of four main teams, with Merner still heading Japan, a fledging business in India, and Joseph Wat leading the Asia ex Japan division after Jordan left the firm earlier this year. The Korean team moved under Asia when Irving died in 2006.

Overall, the group runs a blend of retail money and institutional managed accounts, believing this brings stability of revenue, considering the inherent volatility of Asian investing. In terms of products, Irving’s Korean smaller companies fund was the group’s debut launch in 1995, moving down the market cap scale in a way limited by the sheer size of assets he ran at Schroders. At outset, the fund only inves-ted in stocks with a market cap below $300m although this has subsequently increased to less than $1bn.

Within the key China space, the group has four offerings under Yang Liu, whose track record stretches back to the establishment of the country’s stockmarkets in 1993.

Apart from the core China offering, there are also the absolute return New China fortune, plus a healthcare-focused portfolio and one investing in pre-IPO companies. The latter is designed to capture early-stage companies in the region, with small and medium-sized enterprises often finding it difficult to access the public corporate debt markets.

In Japan, the team has two funds, with Merner’s growth vehicle structured as a closed-ended investment trust domiciled in Guernsey and Taeko Setaishi heading the open-ended opportunities.

Wat and team manage the Asian recovery vehicle, which has already enjoyed a strong bounceback this year and is running around 30 per cent ahead of the MSCI Far East benchmark. This fund was originally focused on stocks showing signs of operational restructuring but Wat later broadened the process to incorporate all undervalued stocks with a catalyst for change.

Finally, the group launched its Indian opportunities fund in 2007, headed by Vinay Gairola out of Mumbai.

On the process side, the group’s research-led approach naturally leads to a focus on mid and smaller companies. While the teams highlight their investment autonomy, the Atlantis process can be characterised by the search for undervalued and mispriced growth stocks, with little attention paid to benchmarks.

They are seeking to access the secular growth story in Asia as cheaply as possible and use comprehensive company visiting to identify opportunities. Managers visit over 3,500 companies a year and believe their access to senior management provides an edge over rivals in picking stocks that will outperform.

Atlantis remains 100 per cent owner managed, with 39 staff in its various locations across the world.

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