exposure to the sector in the group's global opportunities fund has been increased to 40.6%
The First State Global Opportunities fund has built up a 40.6% exposure to Asia, reflecting the positive view manager Andrew Dalrymple has held on the region all year.
Global Opportunities, which reached its three-year milestone on 19 July, is an aggressive 40-45 stock portfolio that pays little attention to index weightings.
Over the period 19 July 1999 to 15 July 2002, the fund is ranked second out of 129 funds in the global growth sector. It made positive returns of 17.55%, after charges, compared to the sector average of -26.72%, according to figures provided by Standard & Poor's.
Dalrymple said the 40.6% exposure to Asia in the £9m fund is the maximum it can hold in this region and is based primarily on attractive valuations combined with strong recovery prospects.
'The P/E ratios of stocks I hold in Asia are on low double digit multiples, which is attractive relative to the rest of the world,' he said. 'Many also have decent yields.
'Because the markets are still recovering strongly following the 1997 crash, there are some cheap stock opportunities around.'
The fund's Asian exposure is predominantly concentrated in Korea, Thailand and Malaysia.
Dalrymple said the types of companies he is focusing on within Asia are almost entirely domestically oriented, such as local banks, finance companies and consumer outlets.
'I am not banking on export-oriented companies,' he added. 'If the US economy lapses back into recession again, exporting type stocks in Asia will be hit quite hard.'
Some 29% of the fund is invested in the US, 4% is in Japan, a further 4% is in the UK, 2% is in Europe and 10% is in emerging markets. Cash currently represents 8% of the fund, indicating Dalrymple's cautious views on the global market.
The 10% exposure to emerging markets is predominantly represented by two South African gold stocks: Goldfields and Harmony Gold. These were bought earlier this year as Dalrymple anticipated a weakening in the dollar, which usually works in the gold price's favour.
The 29% exposure to the US does not represent a negative outlook on that market. Dalrymple said this is merely a by-product of better stock opportunities being found elsewhere. Within the US, he is avoiding technology stocks and is skewed more towards service type companies.
Dalrymple attempts to find companies whose earnings will continue to grow, even if the economy remains difficult. Examples include storage company Iron Mountain and H&R Block, which prepares tax returns.
In terms of size, the fund is dominated by small and mid-cap stocks, as Dalrymple believes this is where most value can be added. Large caps are not excluded; he recently added Johnson & Johnson to the portfolio due to attractive valuations.
Other major stocks include Game Group and Help Hire in the UK, Public Bank and Genting in Malaysia and Siam Cement in Thailand.
Each represents around 2.5% of the portfolio. Although there are some 40-45 stocks, Dalrymple said these tend to be quite evenly weighted.
The Global Opportunities fund is structured as an Oeic. Last month, First State launched a C Share class, which carries performance-related fees.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation