Manager review
Aberdeen does not name the lead portfolio manager and would only say that the Asian equity team manages the fund.
The team has six offices in the region with about 45 analysts, Ng said.
“The team is stable. Most of them started their career in Aberdeen after they graduated. That helps to build and develop the same mindset for all members and they share the same values in terms of investment philosophy.”
The First State fund is co-managed by Alistair Thompson and Richard Jones. Thompson is based in Singapore and has been managing the fund since its inception in 2010. Thompson joined the firm in January 2003 as senior portfolio manager for Asia-Pacific equity.
He also manages other products: the First State Asian Growth, the First State Singapore & Malaysia Growth and the First State Asia Innovation.
Jones is based in Hong Kong and has been co-managing the fund since August 2012, according to FE Analytics. He is a co-manager for other products: the First State Hong Kong Growth, the First State Asian Equity Plus, the First State Asia Innovation and the First State Asian Growth.
Thompson and Jones receive support from the FSS [First State Stewart] Asia team. The firm has split FSS into two investment teams, one based in Edinburgh, rebranded as Stewart Investors and the other, FSS Asia, based in Hong Kong.
“First State considers scale an enemy of good investment returns, and recognises that maintaining a small dynamic investment group has been the key to success over the past years.
“One of the key attributes of the First State team is to maintain a non-hierarchical and small dynamic structure. All team members are encouraged to participate in debates that drive investment decisions. First State considers these as the key elements needed to deliver long-term superior returns,” Ng added.
Fees
The total expense ratio (TER) or the ongoing charges for the Aberdeen fund was 2% for the year ended September 2014, higher than the First State fund’s 1.37% for the year ended 31 December 2014.
“While fees for the First State fund are much lower, the minimum investment amount is higher at $500,000 compared to $1,500 of the Aberdeen fund,” Ng pointed out.
However, in 2013 First State launched a class I series of the fund with a similar minimum investment amount ($1,500) as that of the Aberdeen fund, he added.
For the class 1 fund launched in 2013, the TER is 2.01% for accumulation units and 1.59% for distribution units.
The average TER of the Asia-Pacific ex-Japan equity category of funds is about 1.9%, Ng added.
Conclusion
Both funds are run by strong investment teams and primarily adopt a bottom-up investment approach.
In the Hong Kong universe, the Aberdeen fund is rated 2 Crowns and the First State fund receives 4 Crowns. (The FE Crown Rating ranks funds based on alpha, consistency and volatility).
This indicates the First State fund delivered better risk-adjusted performance over a three-year period.
The Aberdeen fund tends to outperform in a down market, though there were exceptions in recent years. The First State fund has managed to perform reasonably well both in falling and rising markets.
“Investors could put the two funds together as a core Asia-Pacific ex-Japan equity fund holding, as different strategies and styles could offer diversification benefits,” Ng concluded.
