What I Bought Last of those funds that grew rapidly in recent years within this region have had a growth bias . This was what enabled them to flourish in a period of low interest rates and low inflation . However , we believe that the current environment forces us to look for a rarer creation : a credible value-led investment strategy in Asia with robust risk controls .
Cheap for a reason Value investing can create significant idiosyncratic risks within portfolios . After all , if companies are cheap , they are cheap for a reason , even if we disagree with why . Therefore , when selecting a value fund , we place emphasis on the risk controls and correlation analysis , which limits the level of idiosyncrasy in the portfolio while preserving a high active share to enable its companies to deliver alpha . The M & G Asian fund , managed by David Perrett and his team , takes relative positions against the MSCI Asia Pacific ex Japan index , rather than simply assembling its favourite companies . We believe this is the right approach . Our core view is that value-led equities in Asia can deliver returns for investors and therefore we need a portfolio to reflect that , rather than one that uses a straightforward bottom-up approach . A moderated but meaningful tracking error is vital .
Tobias Williams is an investment analyst at Albemarle
Issue 92 - February 2023 / 77 /