Fund Objective

The fund aims to provide long term growth and is designed for investors who are looking for exposure to equity markets in the Pacific Basin region (excluding Japan) and Australasia. The fund invests predominantly in the shares of companies listed on the stock markets in the Pacific Basin and Australasia.

View on Past Performance

Asian Pacific markets rebounded over February, with Chinese and Indonesian markets in particular driven higher by strong commodity and energy prices. The improving political landscape stoked investor sentiment in Thailand and Taiwan, while a combination of severe snowstorms in China, electricity power failures in South Africa and flooding in Australia inflated commodity prices generally.The Asia Pacific Growth Fund returned 7.38% in February compared to the IMA sector average return of 5.95%. Fund performance was helped by Angang Steel, as the hike in steel prices offset iron ore cost pressures, and CNOOC, which benefited on the back of a strong oil price. Returns were held back by property investor Swire, which suffered on the back of interest rate worries, and Korean Telecom, as investors sought to divest themselves of the more defensive stocks.Hong Kong stock picks generally were negative for performance, with Denway denting returns following speculation that its parent was considering a dual listing in mainland China and Hong Kong. On the upside, DC Chemical made a positive contribution as the company signed a long-term contract for solar silicon wafer clients.We initiated a position in TCC International, a subsidiary of Taiwan Cement, as its exposure to the more profitable Southern China region should prove beneficial. We took profits in the Bank of East Asia, which may start to see disappointing growth in Chinese loans. We then used the proceeds to invest in China Merchant Bank, which looks set to benefit from better pricing power amid tightening credit conditions.

Future Expectations

Expectations of both a sharply slower US economy and a weaker US consumer have put pressure on the region's trading positions, and could spark further volatility. However, Asian equity markets should gain support from strong current account surpluses, undervalued currencies and resolutely robust corporate activity.Looking ahead, we expect Chinese growth to continue, albeit at a slightly slower pace, while the improvement in domestic consumption and a stronger currency should ensure corporate profitability remains strong. We continue to focus on stocks with robust stock-specific drivers, especially those benefiting from strengthening domestic trends. For instance, we retain a preference for property and consumption stocks, which offer intrinsic value under-appreciated by the market.

Fund Details