Asian equities keeping investors happy
Asian equities have kept investors satisfied in the year until last quarter end, with sectors heavily invested in the area delivering strong returns often well over 20 per cent, data from FE Analytics has shown.
In the Asia Pacific ex Japan equities sector, the Lakehouse Small Companies fund was the best performer. Despite clocking returns slightly in the negative for the last three months, over the year to 31 March its performance was an impressive 41.35 per cent.
The Mirae Asset Asia Great Consumer Equity fund also performed strongly with yearly returns of 34.59 per cent to the end of last quarter, with the Advance Asian Equity fund coming in third with 31.81 per cent.
The Fidelity China fund was the strongest performer over the last year in the Asia Pacific Single Country equities sector, returning 28.83 per cent. China was clearly a strong choice for investors, with the Premium China fund delivering the next highest returns with 26.63 per cent.
Exchange traded funds (ETFs), while obviously not directly comparable to active funds, focused on China with VanEck and iShares posting the third and fourth highest returns for the sector.
Gary Monaghan, an investment director in Fidelity’s Asian equities team, said that since February 2016, the Asia Pacific area has outperformed other indices. Fidelity’s China, India and Asia funds are among both the best performers in the above sectors and those most heavily invested in the region.
While sentiment about the Asia Pacific had been “ultra-negative” a couple of years ago, that had changed as fundamentals in the region improved and it looked cheap.
Economic and general policy in Asia had generally been conducive to positive returns, Monaghan said, with China and India in particular very good at this. He pointed to India’s de-monetisation move in November 2016 as proof, saying it brought many people into the banking system which then had flow-on effects to the economy.
Monaghan said there was less passive money in Asia compared to, say, the US, so there were more stock-picking opportunities.
It’s worth nothing that while yearly performance has been strong, the last month has unsurprisingly not been a strong one for sectors heavily invested in Asia as talks of trade war, or at least trade negotiations, involving China dominate the region.
The Asia Pacific ex Japan sector recorded -0.96 returns in March, while Asia Pacific Single Country Equities dropped to -1.32 per cent.
The impacts of this seemed cushioned, at least thus far, from the strength of the region over the last year. Even accounting for the March drop, both sectors still recorded returns over between seven to 11 per cent for the six months and over 15 per cent for the year until last quarter end.
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