Replacements for First State Asia Pacific Leaders
Rob Gleeson, head of research at FE, picks three alternatives to star manager Angus Tulloch’s fund, which may soon be closed to new investors.
By Mark Smith, senior reporter
Tuesday August 07, 2012
Following First State's announcement that it will be limiting inflows to Angus Tulloch’s
top-performing £5.6bn fund, advisers may soon have to look elsewhere for their Asia Pacific exposure.
The fund provider, which is a specialist in emerging markets, says it will no longer accept platform business for the First State Asia Pacific Leaders
fund or the off-shore First State Global Emerging Markets Select portfolio.
According to FE data, the Asia Pacific Leaders fund has returned 80.13 per cent over the last five years. Only First State Asia Pacific Sustainability
and Aberdeen Global Asian Smaller Companies
have a better record.
Performance of fund versus sector over 5 yrs
Source: FE Analytics
The move to restrict inflows follows the soft-closure of the group’s China, Latin America, India Asia Pacific Sustainability and Global Emerging Market Sustainability funds at the start of the year.
“While there are plenty of Asia Pacific funds, Aberdeen and First State have been the stand outs for some time,” said Rob Gleeson, head of research at FE. “That demand for risk assets since 2008 has been low, coupled with growing concern over a regional slow down probably explains the relative reluctance to invest capacity in the region, despite the rise in importance of the emerging markets asset class, and the increase in China’s importance globally.”
He added: “Aberdeen and First State have a large number of experienced analysts on the ground in the region, developed over many years, and this set up is hard to replicate. The good news is that there are other alternatives for investors. We like Newton Asian Income
, Schroder Asian Income
and Cavendish Asia Pacific
The £2bn Newton Asian Income fund, managed by Jason Pidcock
and Caroline Keen
, has an impressive yield of 4.47 per cent - more than both the FTSE All Share, and the average fund in the IMA UK Equity Income sector. Income funds are in great demand right now as investors look to supplement a lack of capital growth in an environment of poor global economic activity.
Our data shows that the fund has only marginally underperformed First State Asia Pacific Leaders over five years with a return of 79.97 per cent. It also has a better record over three years, returning 86.88 per cent to Tulloch’s (pictured)
52.09 per cent.
Global income funds offer a level of diversification away from the ailing UK economy and the strategy is emerging as one of the most popular in the fund management industry today.
Schroder Asian Income offers another way to play this theme.
Our data shows the vehicle has returned 70.87 per cent over five years and is the third best performing fund in the sector over the last 12 months.
The five crown rated fund is yielding 4.6 per cent and has a total expense ratio (TER) of 1.69 per cent.
As dividend paying stocks, by their nature, tend to be at the larger end of the capitalisation spectrum, income focussed funds have performed well in the downturn as the biggest companies tend to be the most stable and a flight to quality helps boost the share price.
The final fund, Cavendish Asia Pacific, has a shorter track record than the other two but with fewer assets under management - £76.5m – it is freer to invest in smaller companies and may be more nimble when markets turn.
Performance of funds versus sector over 3 yrs
Source: FE Analytics
FE Alpha Manager Liz Evans
, who runs the fund, is highly regarded in the industry and has maintained solid, if not spectacular performance since the fund launched.
Our data shows that it has achieved second quartile performance over three years, returning 36.59 per cent.
It has been slightly more volatile than the sector average over that period and represents a more aggressive play on the Asia Pacific market.