HEAD-TO-HEAD: Aberdeen Standard versus First State

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Investment approach

“Both funds adopt a bottom-up stock selection process with a quality, large-cap focus,” said Cheung.

However, their interpretation of what constitutes “quality” differs, he said.

For Flavia Cheong, manager of the Aberdeen Standard Asia Pacific Equity Fund, quality companies are those that are “leading the transformation or disruption of their sectors”, according to Cheung.

As a result, there tends to be a technology bias, although the fund has an overweight position in financials as well as to the information technology and communication services sectors.

The fund typically also makes large allocations to China and is confident enough in its internal stock-picking expertise to gain some of its exposure through its own China A Share Equity Fund, which is currently its top holding.

Cheung approves, noting that “by investing in another ASI fund, the managers are leveraging the specialist resources of the firm”.

However, he is a little concerned that Cheong’s control and autonomy could be compromised.

Turning to the First State Asian Equity Plus Fund, Cheung noted that its holdings are typically more geographically diversified, which is “partly a function of the managers’ investment process and philosophy”.

First State veterans Martin Lau and Richard Jones aim to identify companies with “solid, sustainable balance sheets and strong cashflow”, said Cheung.

“Hence, there is a large overweight to India, where many of the country’s leading companies have healthier balance sheets and are less intent on gaining sector dominance than in China,” he added.

Cheung has a clear preference for the First State approach, but he recognises another characteristic shared by both funds.

“They are each consistent in their investment philosophies, which is an essential requirement for any fund. They keep their promises,” he said.

Source: FE Fundinfo, Morningstar (Data in US dollars, 5 March 2020)

Fund characteristics

Country allocation:

Source: Fund factsheets, 31 January 2020

Sector allocation:

Source: Fund factsheets, 31 January 2020

Top 10 holdings

Source: Fund factsheets, 31 January 2020

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