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 Asia Pacific Sustainability

Asia Pacific Sustainability

This strategy aims to deliver long-term capital growth by investing in companies in the Asia Pacific region, including Australia and New Zealand but excluding Japan.

Originally launched in December 2005, this equity-only strategy aims to deliver long-term capital growth by investing in between 30-60 companies in the Asia Pacific region, including Australia and New Zealand but excluding Japan. As with all of our strategies, we are looking for businesses that are well positioned to contribute to, and benefit from, sustainable development.

Strategy highlights: a focus on quality and sustainability

  • Companies must contribute to sustainable development and make a net-positive impact to a more sustainable future. Portfolio Explorer >

  • We invest in high-quality companies with exceptional cultures, strong franchises and resilient financials. How we pick companies >

  • We avoid companies linked to harmful activities and engage and vote for positive change. Our position on harmful products >

  • Our approach is long-term, bottom-up, high conviction and benchmark agnostic

  • We focus on capital preservation as well as capital growth – we define risk as the permanent loss of client capital

Latest insights

Q2 2022

Asia Pacific Sustainability strategy update: 1 April - 30 June 2022

Economic and political news continued to deteriorate over the second quarter. The list of investor concerns is long, and equities have been volatile but mostly weak.

Broad measures of Asian equities are down around 10% in USD terms1 during the second quarter. This is notably better than developed equities where inflation is higher and interest rate increases are considered more pressing. Volatility such as this often presents an opportunity to acquire high-quality companies at lower valuations. 

During the period, positions were initiated in two extremely high-quality companies.

The first is a bank that traces its heritage back to the great depression of 1932, making it one of the oldest, capitalised financial services firms operating in Singapore, South East Asia and parts of China. It is recognised and trusted as one the safest deposit franchises in Asia. We purchased it at slightly under one times book value and with an attractive dividend yield.

We also bought a listed subsidiary consumer goods company, which owns, manufactures and distributes high-quality brands around the largest archipelago in the world. We have admired this franchise for decades, but high valuations had always dissuaded us from ownership. During the period, we were able to take advantage of weakness to introduce this high-quality company to the strategy.

We added to the position size of some existing investments: Shenzhen Inovance Tech (China), an innovative and sustainably focused engineering franchise, listed and operating in China; Glodon (China) which provides software solutions that increase efficiency in the construction sector; and CG Power (India) which manufactures products for power and rail infrastructure.

We reduced Altium (Australia) for reasons of valuation. We sold the strategy’s holding in Hualan Biological Engineering (China), having re-evaluated the franchise strength amidst a shifting competitive landscape. 

1 Source: Bloomberg

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q1 2022

Asia Pacific Sustainability strategy update: 1 January - 31 March 2022

The strategy sold its investment in Xero (Australia) which provides small and medium-sized enterprises with professional software, particularly accounting software, from the cloud.

We have great respect for the quality of the franchise here but we could not reconcile current valuations with the imminent growth challenges facing the company. Mounting concerns about growth at Advantech (Taiwan), Delta Electronics (Taiwan) and Hualan Biological Engineering (China), resulted in us also reducing each of these holdings. To control position size we trimmed Unicharm (Japan). Proceeds from a reduction in Kotak Mahindra Bank (India) were used to finance the purchase of a new investment in a bank in Malaysia. 

Returns at this bank are currently depressed, but the prospects for a healthier economy, and a stronger credit cycle, are likely to improve with rising commodity prices. This bank is well placed to benefit from this environment in a sustainably responsible manner. We also invested in two new healthcare companies which we believe are helping to improve the well-being of people in India and Indonesia. In addition to these purchases, we added to existing holdings in IndiaMART (India) and Techtronic Industries (Hong Kong) on recent weakness. We also increased the position size of the new holding in Malaysia. 

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q4 2021

Asia Pacific Sustainability strategy update: 1 October - 31 December 2021

Strengthening political headwinds and a weakening economy have dissuaded investors from many Chinese equities, particularly in the last quarter of 2021.

In contrast, investor enthusiasm for a number of Indian companies intensified throughout the year. Valuation multiples in India have risen but we believe, given the quality of companies and the duration of growth available to these companies, that they continue to offer attractive opportunities for the long-term investor. Over the quarter, we added to Kotak Mahindra Bank and HDFC. We also continued to build positions in a business-to-business e-commerce platform focused on India’s small and medium-sized enterprises as well as a high-quality industrial franchise where previously weak governance is likely to be improved under the new stewardship of the Murugappa family.

Elsewhere in the region we were able to add to Koh Young Technology (Korea), Fisher and Paykel Healthcare (New Zealand), Vitasoy (Hong Kong), Advantech (Taiwan) and Pigeon (Japan). To complement these additions we also invested in one of the leading pharmacy chains in China, as well as two new industrial companies from our quality list in Taiwan and India.

We have a preference for concentrated portfolios and for this reason we sold and reduced two of the smaller holdings in the strategy, Biocon (India) and Sundaram Finance (India). We sold out of MediaTek (Taiwan) because of mounting concerns over sustainability, cyclicality and valuation. For reasons of valuation only we trimmed Voltronic Power (Taiwan) where short-term market movements had pushed valuations ahead of fundamentals.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Strategy update: Q3 2021

Asia Pacific Sustainability strategy update: 1 July - 30 September 2021

Companies listed in India were strong contributors over the quarter.

The most notable of these were Tech Mahindra (software services), Mahindra Logistics (logistics) and Tube Investments (industrial). Each company has high-quality family stewards, robust financials and quality franchises with the prospect of multi-decade growth.

During the quarter we purchased India’s leading internet-based exchange for basic industrial goods. This company is in the nascent stages of development, recording sales of only US$70m last year. It has high-quality people at the helm and an attractive network-based business model from which to help Indian small and medium-sized enterprises (SMEs) grow. 

We trimmed Dr. Lal PathLabs (healthcare), India’s leading diagnostics business, on valuation grounds and sold Cyient (IT) and Square Pharmaceuticals to fund higher conviction ideas.

Strong gains prompted us to trim TSMC (Taiwan), MediaTek (Taiwan), Silergy (Taiwan) and Hoya (Japan). All of these companies are involved in the manufacture of semiconductors. The current shortage of integrated circuits is well documented and while demand is likely to remain strong, we are cautious on valuation, cyclicality and sustainability.

Concerns over franchise development and product pricing caused us to reduce Pigeon Corp (Japan) and sell AK Medical (China). Deteriorating politics prompted the sale of Hemas (Sri Lanka) and a reduction of BRAC Bank (Bangladesh). Political headwinds have also intensified in China.

In China, there has been an increasing number of government edicts on the role and status of business within society. Economic activity has come under pressure and there are some signs of financial distress. This has had a negative impact on valuations, particularly in the banking, property and insurance sectors where the strategy has no exposure.1  The high-quality companies we own have been insulated from the worst of these tribulations and in response to lower valuations, we increased our holdings in six companies initially purchased last year.

We also had the opportunity to add two new companies: a leading manufacturer of soy sauce and the owner of one of the largest domestic paint brands in China. Both of these franchises are far from the interest and influence of the commanding political heights. Moreover, they are aligned with sustainable development, financed by robust balance sheets and stewarded by individuals with a passion for development over profit.

1 Source: FactSet

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Q2 2022

Asia Pacific Sustainability proxy voting: 1 April - 30 June 2022

During the quarter, there were 348 resolutions from 40 companies to vote on. On behalf of clients, we voted against nine resolutions. 

We voted against Amoy Diagnostics’ request to transfer product rights and equity to a subsidiary, and to amend authorised share capital, as we did not have sufficient information at the time of voting. (two resolutions)

We voted against the approval of an Employee Stock Purchase Plan at Glodon, as we believe one-year vesting periods are too short term and not in shareholders' interests. (three resolutions)

We voted against the appointment of the auditor and the election of two directors at Hualan Biological Engineering. At the time of voting, the company had not disclosed a breakdown of the fees paid to its auditor, and we do not believe the directors are truly independent. (three resolutions)

We voted against Pentamaster’s request to issue shares without pre-emptive rights, as the share discount rate had not been disclosed. (one resolution)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q1 2022

Asia Pacific Sustainability proxy voting: 1 January - 31 March 2022

During the quarter there were 68 resolutions from 12 companies to vote on. On behalf of clients, we voted against one resolution. 

We voted against the approval of fees to be paid to the directors and commissioners at Bank Central Asia as we believe they are excessive. (one resolution) 

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q4 2021

Asia Pacific Sustainability proxy voting: 1 October - 31 December 2021

During the quarter there were 42 resolutions from nine companies to vote on. On behalf of clients, we voted against three resolutions.

We voted against the approval of CSL's remuneration report and the equity-based remuneration of the CEO. We have engaged with CSL over a number of years on remuneration and whilst we appreciate and acknowledge the changes they have made to their remuneration structure, our concerns remain that their remuneration focuses on the shorter term over the longer term, and the absolute level of CEO pay and the gap between median pay. (two resolutions)

We voted against Shenzhen Inovance Technology's request to make amendments to the procedural rules of the company's information disclosure management system as we did not have sufficient information at the time of voting to know what these changes were. (one resolution)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q3 2021

Asia Pacific Sustainability proxy voting: 1 July - 30 September 2021

During the quarter, there were 219 resolutions from 29 companies to vote on. On behalf of clients, we voted against four resolutions.

We voted against Kasikornbank and Philippine Seven’s request for management to approve all other business matters before the annual general meeting (AGM) of shareholders. We consider ourselves active shareholders and prefer to vote on such matters at the AGM. (two resolutions)

We voted against the election of two directors at Dabur as we do not believe they are truly independent. (two resolutions)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

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For illustrative purposes only. Reference to the names of example company names mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies. Companies mentioned herein may or may not form part of the holdings of Stewart Investors. Holdings are subject to change.

Certain statements, estimates, and projections in this document may be forward-looking statements. These forward-looking statements are based upon Stewart Investors’ current assumptions and beliefs, in light of currently available information, but involve known and unknown risks and uncertainties. Actual actions or results may differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements. There is no certainty that current conditions will last, and Stewart Investors undertakes no obligation to correct, revise or update information herein, whether as a result of new information, future events or otherwise.

Source: Stewart Investors investment team and company data. Securities mentioned are all holdings which have/have had a portfolio weight over 0.5% from representative Asia Pacific Sustainability Strategy, Asia Pacific & Japan Sustainability Strategy, Asia Pacific Leaders Sustainability Strategy, European Sustainability Strategy, European (ex UK) Sustainability Strategy, Global Emerging Markets Leaders Sustainability Strategy, Global Emerging Markets Sustainability Strategy, Indian Subcontinent Sustainability Strategy, Worldwide Sustainability Strategy and Worldwide Leaders Sustainability Strategy accounts up to 30 June 2022.

The Stewart Investors supports the Sustainable Development Goals (SDGs). The full list of SDGs can be found on the United Nations website.

Source for Climate Solutions and impact figures: © 2014–2022 Project Drawdown (drawdown.org). Source for Human Development Pillars: Stewart Investors investment team.

Source for climate solutions and human development analysis and mapping: Stewart Investors investment team. Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company), enabling (supported or made possible by products or technologies provided by that company) or indirectly (companies that are involved in and around the solution). Indirect contributions are relevant for climate solutions only.

Investment terms

View our list of investment terms to help you understand the terminology within this document.

Fund data and information

Fund prices and details

Click on the links below to access key facts, literature, performance and portfolio information for the funds and share classes available in this jurisdiction:

Stewart Investors Asia Pacific Sustainability Fund

Overview of Stewart Investors Asia Pacific Sustainability Fund performance

Fund name Fund type Currency Price Daily change Price date
Stewart Investors Asia Pacific Sustainability Class A (Acc) OEIC GBP 749.14 -1.41 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class B (Acc) OEIC GBP 831.67 -1.41 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class I (Acc) IRVCC EUR 11.75 -0.13 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class VI (Acc) IRVCC EUR 3.52 -0.13 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class VI (Acc) IRVCC USD 12.05 0.95 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class A (Acc) OEIC EUR 450.19 0.21 30 Sep 2022
Stewart Investors Asia Pacific Sustainability Class B (Acc) OEIC EUR 130.09 0.21 30 Sep 2022

Share prices are calculated on a forward pricing basis which means that the price at which you buy or sell will be calculated at the next valuation point after the transaction is placed. Where a fund price is marked XD, this means that the fund is currently Ex-Dividend. Past performance is not necessarily a guide to future performance. The value of shares and income from them may go down as well as up and is not guaranteed. Please note that the yield quoted above is not the historic yield. It is considered that the yield quoted represents the current position of investments, income and expenses in the fund and that this is a more accurate figure. Investors may be subject to tax on their distribution. The yield is not guaranteed or representative of future yields. You should be aware that any currency movements could affect the value of your investment. The Funds within the First Sentier Investors Global Umbrella Fund plc (Irish VCC) are denominated in USD or EUR.

Following the UK departure from the European Union, the First Sentier Investors ICVC, an open ended investment company registered in England and Wales ("OEIC") has ceased to qualify as a UCITS scheme and is instead an Alternative Investment Fund ("AIF") for European Union purposes under the terms of the Alternative Investment Fund Managers Directive (2011/61/EU). Accordingly, no marketing activities relating to the OEIC are being carried out by Stewart Investors in the European Union (or the additional EEA states) and the OEIC is not available for distribution in those jurisdictions. We have made documents available for existing EU investors in the ICVC which can be accessed here