HEAD-TO-HEAD: Alquity versus T Rowe Price

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Investment approach

Launched in 2014 and managed by Mike Sell, the Alquity Asia Fund looks to tap into the long-term macro and micro-themes driving Asia, such as demographics and urbanisation, according to McDermott.

The fund is style agnostic and is well-diversified from a sector perspective, with telecoms, media and technology currently having the largest sector exposure (22.5%).

“The result is a fund with a high active share and low correlation and volatility to its peers. This means the fund tends to invest in companies with a keen domestic focus, who are beneficiaries of long-term changes,” he said.

The fund holds between 25-50 stocks and mainly comprises companies with globally sustainable competitive advantages, such as Taiwan Semiconductor, which is currently the top holding in the portfolio.

“The fund also donates to charity partners in the region, reinforcing the team’s belief that social progress should also lead to financial success,” he added.

Turning to the T Rowe Price Asian Opportunities Fund, McDermott said that its fund manager, Eric Moffett, invests in a concentrated portfolio of high-quality names.

“These companies tend to be established, with leading market positions and good management teams who prioritise shareholder returns.”

Moffett looks for returns-focused capital allocation and prudent balance sheet management. He looks at the industry in which the company operates, analysing its structure and outlook.

“The team examines a company’s pricing power, product cycles, market share trends, margin outlook and leverage. Importantly, it assesses if management cares about shareholders and has high corporate governance standards. Once these high-quality compounders have been identified, valuation is assessed,” McDermott said.

While the fund employs a bottom-up investment approach, top-down factors are also taken into account, he noted. For example, the team looks at political stability, government policies, national accounts, central bank policy and currency stability.

Fund characteristics:

Source: Morningstar Direct. As of the end of March 2021

Source: Morningstar Direct. As of the end of March 2021

Source: Fund factsheets. As of the end of March 2021

Top 10 holdings

Source: Fund factsheets. As of the end of March 2021

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