Given a three-year horizon to 27 December 2016, India equity sector funds in both Hong Kong and Singapore returned more than 20%, FE data shows.
Five best-performing sectors in Hong Kong:
Five best-performing sectors in Singapore:
Jonathan Reoch, Blackrock’s lead product strategist for Asian equities, said recently that although India was part of the fragile five markets three years ago, it has become a favourite given a positive outlook driven by domestic growth and adjustments in current and fiscal accounts.
The execution in structural and policy reforms in the market has also driven its economy, Kevin Anderson, SSgA’s Hong Kong-based head of investments for Asia Pacific, said in a media briefing this month.
As for Japanese equities, their performance may be attributed to improving corporate profits.
Rob Weatherston, Old Mutual Global Investors’ Hong Kong-based portfolio manager of the Old Mutual Japanese Equity Fund, said recently that profits have been on an upward trend thanks to the reforms under Abenomics. In addition, Japanese equities have become more attractive in terms of valuations in the developed market space.
Blackrock is also positive in Japanese equities, according to Reoch, with the firm moving from a neutral to a tactical position.
Worst-performing funds
On the flipside, over the trailing three years, European and Latin America equities funds are among the worst-performing funds, even though many of these funds recovered in 2016 alone, according to data from FE.
The outlook in the Eurozone for the coming year remains bleak, with fund managers citing investment risk coming from several elections in 2017.
That is one of the reasons why Anthony Ho, Amundi Asset Management’s deputy CEO for North Asia and chief investment officer for Asia ex-Japan, prefers Asia over Europe, as well as Latin America, in the emerging markets universe.
“There is more political uncertainty in the [non-Asia] emerging markets,” he said earlier this month. “Asia is a little bit more stable – the visibility is higher.”
SSgA’s Anderson shares the same sentiment, with the firm underweight European equities, adding that the region’s economic story is not getting any better with the lack of structural reforms.
The outlook is similar in European fixed income, with Aberdeen Asset Management’s Kenneth Akintewe, the firm’s senior investment manager for Asia fixed income, cautious on the asset class in general.
Five worst-performing sectors in Hong Kong:
Five worst-performing sectors in Singapore:
