Mid Wynd International tactically upped its exposure to China and Japan during the coronavirus market sell-off at the expense of its US equity allocation as its management team looked to pounce on good-quality companies trading at depressed valuations.
Direct exposure to China was increased to 5% by the end of March, up from 2% before the crisis, the Artemis team that runs the £256m global equity offering told Investment Week with its US weighting reducing by a similar amount.
It also took the opportunity to top up its exposure to Japan at the same time.
Simon Edelsten, who co-manages the fund with Alex Illingworth and Rosanna Burcher, said the team has found "better value for money, very strong balance sheets, and companies that are defensive but also have some potential to see a recovery over the next couple of years" in the Far East.
Speaking at the end of March, Edelsten spoke of his belief that Asian countries, including Japan, would be much earlier in easing lockdown measures and attempting to stimulate their economies than Western countries.
"You cannot afford to let everyone go back to socialising, otherwise you just have a resurgence," Edelsten explained.
"So, getting back to normal will take longer than perhaps the market expects - the effects on the [US and European economies] could be pretty brutal."
The exposure to China has been via domestic consumption, "where we think there is a long-term tailwind that we are keen to be involved in", Illingworth explained.
The trust bought into state-owned utility China Tower, which has a 97% market share in the Chinese wireless towers market and is particularly entrenched in the rollout of 5G.
While accepting the firm is heavily dependent on winning contracts through the government, Illingworth said it is "part of the solution, not part of the problem".
"Yes, we understand it is capital intensive as they roll out towers," Illingworth continued.
"But the capex numbers will start to reduce as the 5G network is rolled out and we see the cash coming back to the company being quite healthy, yet we are being asked to pay 0% implied growth."
Elsewhere, Kao, which Burcheri described as "the Unilever of Japan, but better managed" and has exposure to both Japan and China, was also added to the portfolio having been "penalised like any other cyclical company" during the market sell-off.
"It is a very solid business that we managed to pick up at a very attractive valuation."