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Asian growth to offset US slowdown
By Rob Griffin
The past few months have been tough for anyone invested in Asia, but Jupiter's Philip Ehrmann still believes people can benefit from exposure to long-term growth trends in the region, such as government-led spending on infrastructure.
The well-respected manager of the £47 million Jupiter Asian Fund, who has been at the helm since the portfolio was restructured in October 2006, maintains the amount of investment being made and a buoyant consumer market gives cause for optimism.
"The region's economies are benefiting from decent growth rates in China and India, which are balancing out any slowdown in the US," he says. "It means most of them are less reliant on external factors than would have been the case a decade ago."
The objective of the Jupiter Asian Fund, which is benchmarked against the MSCI Asia ex-Japan index, is to achieve long-term capital growth by investing in any economic sector within the Asian and Pacific Basin markets.
"We identify themes that are likely to work well and then decide which industries might be affected by them," explains Ehrmann. "It's then a case of choosing the right companies and management teams."
Avoiding export markets
Ehrmann, whose investment philosophy is based upon finding good businesses with the potential to become market leaders, has around 50 stocks in his portfolio, with the top 10 largest positions accounting for 27.9% of assets under management.
China Mobile (EBT) is the biggest, with a 4.6% weighting, followed by New York-listed Taiwan Semiconductor Manufacturing (TSM), with 3.25%, Chinatrust Financial Holding with 3.09%, and Sun Hung Kai Properties, a Hong Kong property developer, with 2.85%.
"The key characteristics I look for in a company are a strong management team and evidence of being able to execute a business plan," Ehrmann says. Doosan Infracore, a Korean machinery supplier, is a good example. Last year it completed the $4.9 billion acquisition of Bobcat, the utility equipment and attachments business, from Ingersoll Rand Company.
Holdings in the Jupiter Asian Fund are monitored on a daily basis, which means that any period of outperformance will trigger a review of the individual stock.
"The turnover has been higher than usual due to the amount of market volatility," Ehrmann explains. "We've been very active because companies have swung viciously from one side of their price target to the other."
As far as other sectors are concerned, just under a third - 32.66% - is in financials, with 21.32 % held in industrials and 11.62% in technology. Meanwhile, more than a quarter of the fund's assets (28.15%) are based in Hong Kong/China.
Ehrmann remains confident that long-term investment themes will help Asia ride out any short-term storms. "Asian equities are likely to remain volatile, so we're concentrating on areas such as the consumer and infrastructure," he says. "The main driver of performance will be investments in stocks capable of producing strong earnings."
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