The Henderson Pacific Growth fund is only half weighted in the defensive Australian market. Heather ...
The Henderson Pacific Growth fund is only half weighted in the defensive Australian market. Heather Manners, manager of the fund, is focussing on Asia, and in particular the markets of Korea, Thailand and Singapore, which she said will benefit from structural bottom up characteristics, as well as being a geared play on US economic recovery.
Manners uses the MSCI All Countries Pacific Free ex Japan index as a benchmark in the fund. This index has a high 30-35% exposure to Australia, however the fund now has less than 17% invested in the market.
Although underweight in Australia, the Henderson Pacific Growth fund is likely to have more exposure to this market than many of its peers. Manners said about half of the funds in the Far East ex Japan sector use indices that exclude Australia. She said the Henderson fund's inclusion of Australia, which was traditionally a defensive market, had benefited performance while Asia was in the doldrums, however now that a recovery is likely, she prefers to focus on other Far East markets.
"We are getting quite excited about the prospects for Asia and this may lead us to further reduce our exposure to Australia. However, there are also a lot of companies in Australia that we do like, particularly in the resources sector, which includes BHP, Rio Tinto and Western Mining," she said.
While Manners is confident of a recovery across the whole region, led by the US, she expects that Korea, Thailand and Singapore will also benefit largely from domestic recovery.
"There has been a shake out in many sectors, including finance and property, many companies have restructured and there have been a lot of management changes. In general the companies that are left are leaner, meaner and are more profitable so there is a very healthy business environment and prospects for strong return on equity, " she said.
The frAAA rated Henderson Pacific Capital Growth fund is ranked first of 59 funds over five years returning 20.32%, against a sector average of –21.18. Over there years the fund is ranked eighth of 67 funds, after returning 61.3%, compared to a sector average of 35.2%. Performance has however fallen back over three months relative to its peers when the market has rallied. Over three months the Henderson Pacific Capital Growth is 40th place of 73 funds, with returns of 23.98% compared to the sector average of 24.83%.
The portfolio contains between 40 and 50 stocks. At a sector level the fund is most overweight in financials, basic materials and consumer stocks. The fund meanwhile is underweight in technology, real estate and utilities.
Top holdings in the portfolio include Telekomunikasi Indonesia, UOBH Holdings and Samsung Electronics, each of which represent 2.8% of the portfolio. The three banks of Singapore Exchange, Hang Seng Bank and Kookim Bank, each account for 2.6%. Hutchinsoon Whampoa and LG Chemical account for 2.5%, while Asustek Computer and National Finance each represent 2.4% of the portfolio.
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