J O Hambro Investment Management’s (JOHIM) Waverton Asia Pacific Fund has returned 122% to investors since its launch five years ago and outperforming the FTSE Asia ex-Japan index by 12%. In 2010 the fund returned 23%, outperforming the index by 3%.
Fund Manager Alan Gibbs says: “The current investment environment in Asia looks very enticing and any volatility resulting from inflation / tightening fears should be seen as a significant buying opportunity, especially in China. Inflation has been rising across the board in Asia for some months but this is mostly a transient phenomenon led by La Nina-induced food prices and Bernanke-induced commodity prices.
“Once it becomes obvious that inflation will subside in the second quarter (to around 4%), investors will turn their attention back to the excellent economic fundamentals in Asia and to the many and varied investment opportunities across the region. With valuations below historical averages and very favourable relative to other markets we think Asian equities could be in for quite a ride.”
Gibbs’ investment philosophy is built on 35 years of experience in Asia’s markets, resting on three basic tenets: Pragmatism – don’t tie your flag to one mast (growth or value) – look for the best ideas in the current investment environment and be disciplined; Unconstrained – investments should come from idea-based stock selection without being hostage to benchmarks; Conviction – run a concentrated portfolio of stocks, which allows you to get to know companies well.
Edward Stileman, assistant fund manager, Waverton Asia Pacific Fund, JOHIM adds: “Urbanisation will continue to be the most powerful force driving economic development and equity market returns in Asia over the next 5-10 years. A mass flow of people from the countryside to the cities brings investment in infrastructure, improving productivity and a growing middle class hungry to consume.
“Asia will require over USD 8 trillion of investment in infrastructure before 2030, by which time it will play host to a middle class population (daily per capita income of USD 10-100) of 3.2 billion people, dwarfing the USA’s projected 400 million middle-class population. For the last five years this environment has created a happy hunting ground for equity investors in Asia and we think the next five years could be even more profitable.”