Architas’ Caspar Rock has restructured the Asian equities portion of his £64m Multi-Manager Growth fund to smooth returns.
The deputy chief investment officer has halved the fund’s holdings in First State’s Asia Pacific Leaders fund, and sold out of the Aberdeen Asia Pacific portfolio. Rock has cut the 6.13% position in First State to 3.27%, and has sold the entire 5.04% holding in Aberdeen.
He used the cash generated to take a 3.38% position in Fidelity South East Asia, and 3.34% in the Veritas Asia fund. Asian equities make up 10% of the fund.
Richard Philbin, the chief investment officer, says: “We were not unhappy with the performance of the First State fund, but by bringing in Fidelity we neutralised some of the effect of holding Angus Tulloch’s fund on its own.”
Fidelity’s Allan Liu has a low exposure to Australia and is tilted towards large caps through about 170 positions, he says.
Tulloch’s 50 holdings are of a more varied size, and take greater exposure to Australia at the expense of China.
“By holding both funds, you reduce geographic risk. The two managers are playing similar themes, but doing it differently,” Philbin explains.
“When you are investing in unstable markets like Asia it can add volatility, so you need to be cogniscent of risk and the styles of managers.
“Taking risk off the table is not necessarily bad, especially when you see the markets whipsawing 1% to 2% in a session.”
Veritas manager Ezra Sun periodically caps his portfolio, which Philbin says is a positive as it prevents a large pool of assets from affecting performance.
“The three funds have each had their own styles for a very long time and their managers have had the same approach and philosophy,” he says.
Architas likes Asia for its relative lack of indebtedness, both at corporate and government levels, its growing middle classes, and less troubled banking system than the West.
Additionally, the West does not have diversified conglomerates like Samsung, involved in activities from shipbuilding to electronics.
Rock has also trimmed the UK equity holdings in Multi-Manager Growth by 1% to 49% this year, increasing US portfolios commensurately to 16.5%. The fund also has 11.5% in Europe and 5% in emerging markets.
