Asia’s fund selectors bullish on Apac ex-Japan

Asset Class in Focus

The worst performing Asia-Pacific ex-Japan funds last year still reported double-digit returns, and Asia’s fund selectors told FSA they intend to stock up on the asset class in 2018.

Asia's fund selectors bullish on Apac ex-Japan

Respondents to Fund Selector Asia’s Asset Class Research in December 2017 indicated a significantly higher interest in Asia-Pacific ex-Japan equities than three months earlier.

The survey, which FSA conducts quarterly, asks fund selectors in Hong Kong, Singapore, Thailand and Malaysia about their long-term intentions around asset allocation to a range of asset classes.

Asia-Pacific ex-Japan equities stood out as the asset class with the highest net number of potential buyers. The number is calculated as a difference between the percentage of respondents who said they would add to their allocation and of those who said they would reduce it in the following 12 months.

Data: FSA

Asia-Pacific ex-Japan equity funds domiciled in Luxembourg, the United Kingdom, Ireland and Hong Kong – the four largest markets most relevant to Asian investors – had a total AUM of $167.1bn at the end of November 2017, according to data from Morningstar. In the first 11 months of 2017, they saw net inflows of $3.56bn.

The sector performed very well in 2017, with all funds available for sale to investors in Hong Kong and/or Singapore delivering positive returns. The best one, the Morgan Stanley Asia Opportunity Fund, registered for sale in Singapore, finished the year with a 73.3% gain, with several other funds delivering returns above 50%.

In Hong Kong, among the 123 funds in this category authorised for sale, growth funds from Barings and JP Morgan topped the list.

Top 5 best performing Apac ex-Japan equity funds in Hong Kong in 2017

Fund1-year Return
Baring Asia Growth57.84%
JP Morgan Asia Growth55.52%
AB (HK) Asia ex-Japan Equity Portfolio54.71%
Baring Eastern Trust54.50%
Invesco Asia Consumer Demand52.21%

Top 5 best performing Apac ex-Japan equity funds in Singapore in 2017

Fund1-year Return
Morgan Stanley Asia Opportunity73.30%
Barclays Global Access Pacific Rim (ex-Japan)60.25%
Melchior ST Asian Opportunities57.90%
Baring Asia Growth57.84%
JP Morgan Asia Growth55.52%

It was indeed a strong year for this category. Even funds at the bottom managed to eke out double-digit returns during the year.

Worst performing Apac ex-Japan equity funds in Hong Kong in 2017

Fund1-year Return
Fidelity Asian Smaller Companies21.57%
Schroder ISF Asian Smaller Companies21.06%
First State Singapore & Malaysia Growth20.87%
JP Morgan Asia Equity Dividend20.49%
Aberdeen Global Australasian Equity19.55%

Worst performing Apac ex-Japan equity funds in Singapore in 2017

Fund1-year Return
UBS (Irl)MSCI Australia Ucits ETF19.59%
Aberdeen Global Australasian Equity19.55%
CIMB IAM (IE) Islamic Asean Equity19.54%
JOHCM Asia ex Japan Small and Mid Cap17.86%
UOB United Asean Income16.43%
Data: FE, as of 31 December 2017, returns in US dollars

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