March produced a good return within equity Markets although concerns over inflation and interest rates were a negative influence particularly as it affected Sterling, which fell against the US $ and the Euro – primarily on post-Brexit concerns and uncertainty over vaccine supplies.
The following chart shows the US and UK market during December. The FTSE 100 represents the 100 largest companies in the UK and the S&P 500 represents the 500 largest in the US. The Dow Jones is often quoted but this only shows the top 30 companies and is dominated by technology companies.
As explained in our recent communication regarding the ongoing format of monthly newsletters, this month there is a focus on one of the funds we recommend.
FSSA Asia Focus Fund
This fund is held by all portfolios in the Harmonic range and represents between 3% and 9% of the asset spread with in these portfolios.
FSSA Investment Managers is an investment brand of First Sentier Investors, which was bought by the Mitsubishi Trust and Banking Corporation in 2019. First Sentier has over 850 employees globally and over US$176 Billion under management.
Their Asia Focus fund invests for the long term and normally holds between 60 to 80 companies, which means there is a low turnover on the fund. The investment team are based in Singapore, Hong Kong and Edinburgh and is led by Martin Lau who has been the fund manager since inception in 2015.
As of the end of February, there were 61 companies held representing exposure of 23.8% to China, 20% to India, 12.3% to Taiwan, 11.7% to South Korea and 9.8% to Hong Kong. The balance is mainly in other Pacific countries although the fund is able to hold up to 20% in other geographic areas.
The three largest holdings in the fund are;
7.4% in the Taiwan Semiconductor Manufacturing Company –the world’s most valuable semiconductor company. It has recently agreed construction of a factory in Phoenix, Arizona, in response to Trump’s warning about licences for electronics made outside of the US. This is an investment of $12 Billion.
The fund has 5% in Tencent, a Chinese multinational conglomerate, which is the world’s largest video game vendor.
It also has 5% in HDFC Bank, India’s largest private bank, which specialises in development capital.
This fund is performing well and has a slightly lower level of risk than the ‘average’ Asia Pacific fund, whilst its performance has been slightly above average as the following chart confirms.
The information provided in this report is based on our own opinion and offers no guarantee that our expectations will be met. Past performance is no guide to future results. As always, should you have any concerns you wish to raise, please do contact us.
Due to the current Covid rules our office is now open, so please do contact us on 01803 873978.
Keep safe
