In this 'Essentials' video, Andrew Gillan provides an overview of the Asian Growth Strategy that he manages with Associate Investment Manager, Mervyn Koh. The strategy seeks long-term capital appreciation by investing at least two thirds of available total assets in a variety of sectors across Asia excluding Japan equity markets.
What's your investment universe?
Whilst the Asian Growth Strategy is benchmarked to the MSCI regional index we do have a lot of flexibility in terms of where we invest, so we are very unconstrained, relative to both the country level and the sector level,and we have been prepared to take positions as much as 20% away from those individual country weightings or sector weightings within the index.
What's your investment approach?
This approach is truly active and therefore we are not constrained; we don't have to allocate capital to marketswe view as unattractive. In terms of our investment approach we adopt high conviction and high active share within our portfolios, so the Asian Growth Strategy typically holds less than 40 companies (at 31 May 2017), that compares with a benchmark of over 600 companies, so it is very focused in the types of businesses and companies that we really think give us the best opportunities in the region, at any point in time.
In terms of our investment style, we are very much bottom-up in our approach so we see risk more at the company level and pay a lot of attention to meeting the management teams of the companies that we invest, similarly looking at the competition and the competitors to the companies in which we invest, rather than focusing too much on the top-down and the macro because we can identify good opportunities even when macroeconomic conditions aren't so supportive.
Describe your ideal investment
Our ideal investment is a company that generates a superior return on equity to the market; it continues to deliver a superior earnings growth but the key issue is that it has very good franchise type attributes, very strong barriers to entry so that it can maintain its edge over the competition on a five to ten-year view.
What's the significance of Asia as an investment destination?
Asia, as a region, is very much the driver of global growth so, despite some of the negative headlines we might read about China, growth in Asia - including China, including India and Indonesia, is among the highest in the world and that gives us tremendous opportunities as investors.
Why consider your strategy?
TheAsian Growth Strategy is differentiated from some of our peers in that it is extremely focused, withless than 40 stocks in the portfolio and also in terms of the investment style - we havequality core to the portfolios but we also supplement that with cyclicals or with other opportunities where we see compelling valuations.And we believe that this approach can give us good performance in different market conditions.