Portfolios in the Far East sector have generally produced positive returns throughout 2002. Funds th...
Portfolios in the Far East sector have generally produced positive returns throughout 2002. Funds that have performed in the top 10 have focused on companies geared to domestic consumption.
Invesco had four funds in the top 10 for the Far East sector. The Invesco Asia Alpha portfolio has had a volatile time. Although it is number two ranking in the sector over 12 months, with a 30.56% return. This was divided into a rocketing first six months relative to its peers, then a sharp drop down to almost the bottom performer over the past six months, followed by a sharp rally back to second quartile in the previous three months.
The Invesco GT Asian Enterprise was ranked seventh over the year with a return of 22.44%. Two other portfolios managed by Invesco in the top 10 include the Norwich Invesco GT Asian Enterprise and the Royal Skandia £ Invesco GT Asian Enterprise.
The focus of the Asia Alpha fund is to seek absolute returns from a diversified portfolio of investments in the Far East, while the objective of the Invesco GT Asian Enterprise portfolio is to invest in small- to medium-sized companies with a market capitalisation of less than $1bn.
Alfred Ho manages the Invesco GT Asian Enterprise fund. The Invesco Asia Alpha portfolio was co-managed by Alfred Ho and Ian Hargreaves.
Throughout the year the Invesco GT Asian Enterprise fund has performed well by concentrating on Asian Pacific themes with domestic consumption stories. For example, in Korea, the portfolio has been investing in banks. Korean banks' returns on equity have more than doubled since 1997, yet their price to book ratios have either remained stable or fallen.
The Invesco Asia Alpha fund has also been invested in banks in Korea. Throughout the year top 10 holdings have included Shinhan Financial and Kookmin Bank, which has 30% of the market share.
In Hong Kong and Singapore the property market has performed well. The discount to net asset values of many developers are at a cyclical trough and with profit margins so thin, supply is likely to decline going forward.
The Pictet IF Asian Equities portfolio was ranked four. It had a performance rating of 27.01%.
Emil Wolter, fund manager of the Pictet IF Asian Equities portfolio, says the performance can be attributed to its positions in Thailand and Indonesia.
He says Thailand has been a good domestic growth story. He has invested in areas such as finance, auto and property sectors. The stock market in Thailand is just starting to pick up following the Asian financial crisis. In Indonesia, consumer durables have performed well for the portfolio.
The fund has been overweight financials, cyclicals, and non-cyclicals. For example, one stock in the portfolio was Panin Bank. Wolter chose this stock because its market capitalisation is just 8% of deposits and Australian bank ANZ owns a stake.
The government is working towards deregulation and is trying to combat the terrorism situation.
At the beginning of the year the portfolio performed well in China. Wolter says this has been because the country's liquidity is improving and monetary growth is returning. In China, Wolter has been positive on metals, chemicals and technology.
Walter says the good performance is down to its investment strategy that uses both a bottom up and top down approach. These returns have been achieved through buying cheap stocks with improving fundamentals, he says. The portfolio's bottom-up stock picking approach varies depending on the sectors.
For growth stocks the sustainability of growth is examined through price to book and sales values. For the industrial sector the industrial capacity of stocks is examined to see if it is below replacement costs. For the financial sector the capital strength and business franchise is examined to see price to book value and market capitalisation to deposits.
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