Fund performance
The First State fund is constructed to be more resilient to the downside, so it fares better than the Value Partners vehicle when markets are falling.
Share noted that in 2011, a particularly strong bear market year, the First State fund was a lesser loser. Its total return for the First State fund was -12.35% compared to -17.17% for the Value Partners fund.
Share also pointed out that despite sustaining losses in 2011, Lau chose to focus on his long-term strategy and he did not rotate his holdings. The First State fund subsequently went on to deliver positive returns in 2012-2014.
For the Value Partners fund, Share said that Cheah and So have proven that the fund can withstand a bear market.
A look at total returns:
| YTD | 2014 | 2013 | 2012 | 2011 | |
| First State fund | -0.34% | 6.70% | 11.92% | 17.64% | -12.35% |
| Value Partners fund | -0.48% | 13.53% | 11.16% | 13.98% | -17.17% |
Source: Morningstar
Share said that the three-year standard deviation measure, a representation of volatility, is noticeably higher for the Value Partners fund, reflecting the portfolio managers’ preference for frequent stock rotations.
“The Value Partners fund has a turnover of 270%. Cheah and So change the fund’s holdings very rapidly. Most of their holdings will be rotated out of the fund within the year,” Share said.
She said that the First State fund emphasis on management quality and sustainable growth has resulted in a lower standard deviation measure.
A snapshot of both funds’ volatility:
| 3-year standard deviation | Beta | |
| First State fund | 14.32 | 0.90 |
| Value Partners fund | 18.64 | 1.06 |
Source: Morningstar
Manager review
Lau started his investment career in 1995 and spent six years as a Greater China equities portfolio manager with Invesco before joining First State in 2002. He currently manages around $15bn spread across several Greater China and Asia Pacific mandates.
