We invest across Asia Pacific because we are passionate about the region and believe it provides an unmatched opportunity set. Home to 45% of the world's population and contributing more than 30% of global GDP, the region is a melting pot of cultures and countries at varying stages of economic development. Economic growth continues to outpace the rest of the world and by 2030 Asia Pacific is expected to account for almost 50% of global GDP. At the micro level, Asia Pacific is home to an array of dynamic businesses led by well-educated and innovative management teams. Corporate balance sheets are well capitalised which allows management to reinvest to support growth, but valuations remain attractive relative to those in other regions. Despite attractive fundamentals and valuations, Asia Pacific remains signficantly under-represented in both global equity indices and investment portfolios.
Why Asia Pacific?
Our philosophy often leads us to segments where profitability is supressed, capital investment is declining and consolidation is ocurring. Our interest is also piqued by companies undergoing restructurings, especially where there has been management change. Our research is not however limited to companies achieving low absolute levels of profitability. We weigh a company’s current returns against historic returns, competitor returns, the cost of capital and the competitive environment.
Quantitative analysis and company interactions help us build a more informed view of a company's strengths, weaknesses, opportunities and risks. We compare our findings against the market valuation of the company.
Investment process
We see a portfolio that is highly diversified and constructed in a bottom-up, benchmark agnostic fashion as the most effective means of expressing the conviction we have in our investment beliefs. Our portfolio looks and performs differently to our regional benchmark and many of our Asia-focussed peers.
Our diversified approach reduces the degree of idiosyncratic risk, allows us to take on opportunities with potentially higher returns outcomes and deploy more capital into niche areas. We believe diversification also limits the potential for overconfidence and endowment biases to take hold.