HL Multi-Manager Asia & Emerging Markets - one year on
Kate Marshall | Mon 09 May 2016
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The HL Multi-Manager Asia & Emerging Markets Fund launched one year ago. Managed by Roger Clark and David Smith, their aim was to identify the best fund managers investing in the Asia Pacific and emerging regions and blend them into a single portfolio.
It has since been a turbulent year for Asian and emerging stock markets. Fear over slowing growth in China, currency weakness in some economies, and political unrest in the Middle East has led to heightened volatility. Weakening demand for commodities has proven painful for resource-rich economies such as Brazil, which has been damaged further still by several high-profile corruption scandals and a president in danger of impeachment.
Against this backdrop, stock markets across the region have fallen in value. Over the same time, while the fund has fallen in value, it has successfully outperformed the broader Asian and emerging markets by 5.9%* and 9.1% respectively, as well as the IA Global Emerging Markets and IA Asia Pacific excluding Japan sectors. These markets have performed better in recent months, although please remember past performance is not a guide to future returns.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| May 11 -
May 12 |
May 12 -
May 13 |
May 13 -
May 14 |
May 14 -
May 15 |
May 15 -
May 16 | |
| FTSE AW Asia Pacific ex Japan |
-7.7% | 17.6% | -6.6% | 24.7% | -12.7% |
| FTSE Emerging | -9.6% | 9.8% | -10.6% | 23.6% | -15.9% | HL Multi-Manager Asia & Emerging Markets |
- | - | - | - | -6.8% |
Source: Lipper IM to *03/05/2016. Past performance is not a guide to future returns. Full year past performance data before 1 May 2015 is unavailable.
What has contributed to performance?
Over the year, higher-risk small and medium-sized companies outperformed their larger counterparts. Funds with a bias to the smaller end of the market have therefore held up relatively well, including the Aberdeen Global Emerging Markets Smaller Companies and Schroder Small Cap Discovery funds.
The fund also benefited from its largest investment - the Stewart Investors Asia Pacific Leaders Fund. This fund's bias towards defensive areas of the market and higher-quality companies delivering stable earnings means it has held up relatively well during weaker times for the market.
On the other hand, the Lazard Emerging Markets Fund had a tougher year. Manager, James Donald, favours undervalued companies, many of which have featured in more economically-sensitive sectors that have tended to perform less well than more defensive industries. James Donald is, however, a highly-experienced emerging markets investor with the support of a well-resourced team, and the managers maintain their long-term conviction in the fund.
Elsewhere, the Aberdeen Latin American Equity Fund got off to a weak start against a difficult economic backdrop for Latin America. Roger Clark and David Smith topped up this investment during periods of weakness, which subsequently proved fruitful as Latin American markets have bounced in recent months. Some profits have recently been taken from the investment.
What changes have been made?
Investments in the Newton Asian Income and Newton Emerging Income funds were sold after Jason Pidcock stepped down as manager and left Newton. He subsequently joined Jupiter Asset Management, at which point Roger Clark and David Smith took the opportunity to invest in his new Jupiter Asian Income Fund. As a renowned Asian income investor with a successful track record spanning over 20 years, they have high hopes for the fund's long-term prospects.
Outlook
The fund continues to provide core exposure to larger emerging market and developed Asian stocks. This is combined with funds investing in higher-risk smaller companies from across the Asian and emerging world, where Roger Clark and David Smith feel fund managers have the greatest potential to add value through their stock picking.
While Asian and emerging markets have seen a recent improvement in performance, the managers believe these markets remain lowly-valued, which could present adventurous investors with an attractive entry point. That said, these markets are higher risk and could get cheaper still.
Our verdict
When investing in the emerging and Asia Pacific nations, we believe a diversified approach is sensible. The disparity between countries means this part of the world can be home to some of the best and worst-performing areas at any one time.
The HL Multi-Manager Asia & Emerging Markets Fund provides exposure to a multitude of countries and companies. It is managed by our experienced in-house research team; choosing and monitoring what they believe to be the best funds in the region. In our view, this portfolio could provide core exposure to some of the fastest-growing regions of the world and the additional costs associated with running a multi-manager approach are justified here. The Vantage charge of up to 0.45% per annum also applies. View our charges.
The HL Multi-Manager funds are managed by our sister company HL Fund Managers.