Asia chief hugo young to run new version of small cap fund from singapore
Aberdeen is adding an open-ended version of its Asian Smaller Companies investment trust to its Dublin fund range in April.
The offshore Aberdeen International Asian Smaller Companies Fund will be run by Asia chief Hugh Young out of the Singapore office. A Luxembourg-listed mirror fund will follow in September primarily aimed at European investors.
Asian Smaller Companies will be targeted at institutions, fund of funds and private bankers in both the UK Europe.
Fees are negotiable but capped at a 5% maximum initial and 1.75% maximum annual charge. The portfolio will typically hold 50-70 stocks in the Asia ex-Japan region. Young will also have scope to invest in UK and US small caps that derive much of their revenues or profits from, or have a significant proportion of their assets in, Asia Pacific countries.
The open-ended version will also have a broader scope of companies in which it can invest. While the investment trust is restricted to stocks with a sub-$600m market cap, the Oeic will be able to invest in all stocks with a market cap of up to $1bn.
Young, managing director of Aberdeen Asia, said the fund will complement the group"s existing offshore range, which includes the Asia Pacific, China Opportunities and India Opportunities portfolios, and be run using the same investment process. This emphasises bottom-up research underpinned by regular company visits.
He initially focuses on the quality of a company before assessing its price and how it will fit into the portfolio. Turnover is low, about 25% annualised, and the focus on quality means the fund is typically lower beta than many of its peers. The portfolio will not be benchmark driven, as Young believes indices tend to be backward looking by nature, while Asian indices are particularly unrepresentative.
"They do not even reflect existing markets," Young said. "The massive Chinese 'A" share market is not included and Australia should not be more than 35% of an Asian benchmark."
He is happier about the outlook for the region, however, anticipating a long-term annual trend growth rate of 6%. Young"s major overweights are currently Singapore, India and China/Hong Kong. The loss of Singapore"s manufacturing base to China is leading to local companies increasing their focus on creating shareholder value, Young said.
Increased dividend payments, share buybacks and merger and acquisition activity have prompted him to move 10% overweight Singapore, particularly favouring banks.
£300bn of liabilities
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