Bestinvest says
The fund makes use of extensive support spread throughout the region. The main team is based in Singapore with each of the team having both investment manager and analyst responsibilities. This team is also supported by smaller teams in Australia, Thailand, Malaysia and Hong Kong. Smaller companies are considered higher risk investments and often exhibit higher volatility than larger companies but this comes with a concomitantly higher return potential. Therefore investors with a higher risk tolerance might consider this fund as a complement to a core Asian equity exposure.
The manager uses a watch list of 150 stocks which is drawn both from the roughly 200 stocks at the smallest end of the MSCI Asia Pacific index and non-benchmark companies that are identified through the team's own research and contacts.
Rigourous bottom-up analysis is carried out on these companies, primarily looking for quality indicators, which the managers define as having 1) an identifiable core franchise, 2) recurring earnings growth, 3) high quality management, 4) a strong and transparent balance sheet and 5) a history of good treatment for minority shareholders.After this quality filter, the team assesses the value of the company based on a range of standard financial measures and compares this to the market price and the company's peer group. The managers take a conservative approach, and often value companies 10-15% lower than consensus estimates.
Companies are ranked 1 (highest)-5 (lowest) for Quality and Price, and must have at least a 3 in each to be considered for inclusion in the portfolio.