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Skandia takes aggressive approach to Asia

Skandia Investment Group’s Asian equity fund takes a more aggressive approach than other Asian funds in Skandia’s range. It aims for growth by investing in 60 to 100 Asian stocks excluding Japan.

The fund is managed for Skandia by Australian group MIR, which has run the Asian stock portfolio of the Skandia global dynamic equity fund since launch in 2009. MIR combines quantitative and qualitative research along with value and momentum strategies to generate the maximum returns from the region. It looks for stocks that provide good value and good momentum, an approach which has historically led to portfolios with a tilt towards medium sized and smaller companies.

MIR believes that undervalued stocks can generate returns in excess of the market and that stocks with positive momentum will out-perform. It recognises that sometimes value strategies will underperform and its research has shown that momentum strategies can complement the value approach, with a combination of both producing returns that are better than either strategy on its own.

Similarly, MIR combines quantitative and qualitative research to mitigate the weaknesses of both approaches in isolation. It focuses its qualitative research on stocks that have made it past its quant screen. Stocks are screened in terms of valuation, momentum and other factors. Qualitative research focuses on financial strength, the potential for earnings improvement, re-rating by the market and earnings risks that may not have been identified by the quant screens. The final portfolio will contain stocks with good value and momentum characteristics while higher volatility and distressed stocks that are typical across many of the Asian markets are avoided.

This fund’s blend of investment styles and research strategies may appeal to investors who are looking for an Asian fund run by a specialist in those markets. MIR has a good track record but does not have much of a UK presence. However, the Skandia brand should ensure it appears on the IFA radar where appropriate for clients.

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Gerry Brown

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