Invesco Perpetual Asian - broad exposure to Asian markets
Kate Marshall | Thu 07 April 2016
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Key Points
- This fund offers broad exposure to larger Asian companies
- The managers have positioned the portfolio to benefit from rising consumption across the Asia Pacific region
- They have sought to take advantage of the current low valuations on offer
Our view on this fund
Stuart Parks has managed the Invesco Perpetual Asian Fund since January 2005 and was joined by co-manager William Lam a year ago. Stuart Parks has a good long-term track record investing in Asian stock markets and over his tenure the fund has returned 221.7%* compared with 185.4% for the average fund in the sector, although please remember past performance is not a guide to future returns.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| April 11 -
April 12 |
April 12 -
April 13 |
April 13 -
April 14 |
April 14 -
April 15 |
April 15 -
April 16 | |
| IA Asia Pacific ex Japan | -6.7% | 16.8% | -7.2% | 18.8% | -8.2% |
| Invesco Perpetual Asian | -5.6% | 15.0% | -4.4% | 19.7% | -6.7% |
Source: Lipper IM to *01/04/2016. Past performance is not a guide to future returns.
This relatively concentrated fund primarily focuses on larger companies and, while it has outperformed over a longer period, performance has tended not to deviate significantly from the broader Asian market. Our analysis suggests the fund's country positioning has boosted performance, although stock selection has been muted. We feel there are other funds in this sector with the potential to deliver greater levels of outperformance over the long term and, for this reason, the fund does not feature on the Wealth 150 list of our favourite funds across the major sectors.
Portfolio review
Stuart Parks and William Lam favour companies they believe will benefit from rising domestic consumption across Asia. This includes holdings in Chinese internet companies, such as NetEase and Baidu, which the managers have recently topped up following market weakness.
Overall the managers have continued to focus on attractively-valued companies with strong balance sheets and good cash flow. They have recently added to positions in Downer EDI, a provider of engineering services in Australia, and FIH Mobile, a Taiwanese mobile manufacturing services company, which they feel meet these criteria.
In turn, they have sold holdings in ANZ Bank and trimmed holdings in E.SUN Financial and Bank Negara Indonesia. The fund no longer has exposure to Australian and Chinese banks. However, the managers continue to hold other banks across the region that they consider to be high quality and undervalued.
Outlook
It has been a troubled year for Asian stock markets. Many investors have been averse to the adventurous region as a number of economies have moved to a slower rate of growth. Asian markets have also had to contend with ongoing policy uncertainty in China; US interest rates starting to rise; and lingering concerns over debt levels.
While these problems are unlikely to be solved in the short term, Stuart Parks and William Lam believe there is little reason to expect things to deteriorate much further. The US Federal Reserve has stressed that interest rate rises will be slow, while Asia's debt overhang is not new news. Furthermore, while economic growth has slowed, it remains relatively stable and still compares favourably to that of developed markets, according to the managers.
Valuations in Asia are also low compared with their history and other global stock markets. In this environment, interesting opportunities have continued to present themselves to the managers.
Find out more about this fund including how to invest
Please read the key features/key investor information document in addition to the information above.