
Asia Pacific and Japan Sustainability
The strategy was launched in June 1988, and since September 2019 has been a dedicated sustainability strategy.
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The strategy was launched in June 1988, and since September 2019 has been a dedicated sustainability strategy. This equity-only strategy aims to achieve long-term capital growth by investing in a portfolio of between 30-60 companies in the Asia Pacific region, including Japan, that are helping to bring about a more sustainable future.
The ability to invest directly in Japan allows clients to own high-quality Japanese companies far earlier in their Asian growth journeys, as well as accessing a greater pool of domestic companies with attractive growth opportunities that are 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
Strategy update: Q4 2022
Asia Pacific and Japan Sustainability strategy update: 1 October - 31 December 2022
Over the course of the quarter the following two new companies were added to the portfolio.
The first, Advanced Energy Solution (AES) (Taiwan: Industrials), a provider of battery packs to the e-bike, data server and electric vehicle markets. There are very obvious tailwinds driving the growth of electric batteries across many sectors but we have long struggled to find companies who have the ability to create any value from their part in the value chain: many players in the supply chain have strong sustainability positioning, given their role in the proliferation of batteries, but do not meet our quality threshold. AES, however, is a rare exception where they enjoy an attractive competitive position thanks to their ability to provide customised packs to customers that are essential to the performance and safety of end-products. In return, AES enjoys long, loyal relationships with customers that come with pricing power and attractive levels of profitability. The management team at AES is highly competent with a track record of long-termism that we are very excited to partner with.
SHIFT Inc. (Japan: Information Technology), a provider of outsourced software testing services, was also added to the portfolio over the quarter. Shift’s high-quality, low-cost testing capabilities allows their customers to focus on higher-value parts of their business (like development) while also reducing the cost, both financial and reputational, of releasing poor-quality software. We believe the company’s founder and CEO, Tange-san, to be a very high-quality steward who we back to continue delivering attractive levels of growth in an under-penetrated market, with minimal levels of competition.
Well-documented, top-down concerns about Chinese growth created the opportunity to add to a few of our mainland-listed companies (Amoy Diagnostics: Health Care – cancer diagnostics; Glodon: Information Technology – software for the construction industry; Kingmed Diagnostics Group: Health Care – independent diagnostic laboratories) as well as Silergy Corp (Information Technology), a Taiwanese-listed designer and manufacturer of analog semiconductors with material exposure to China.
The portfolio’s small holding in Naver (South Korea: Communications Services) was sold over the period as we failed to gain comfort in the company’s long-term quality and sustainability positioning. Infosys (India: Information Technology) was also sold for valuation reasons.

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.
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Strategy update: Q3 2022
Asia Pacific and Japan Sustainability strategy update: 1 July - 30 September 2022
Top-down macroeconomic headlines continue to dominate Asian markets with manic swings in sentiment based on the reading of central banks' policies, economic data and geopolitical narrative.
Our focus on owning a portfolio of high-quality, resilient franchises run by long-term competent owners, as well as our understanding that we add little value in the forecasting of macroeconomic events, meant there were minimal changes to the portfolio over the quarter.
Positions in Tech Mahindra (India: Information Technology), Japan Elevator Service (Japan: Industrials) and Mainfreight (New Zealand: Industrials) were increased as questions over how an economic slowdown would impact their respective business models weighed on valuations: we believe all enjoy resilient franchises with potential for both margin expansion and long-term growth. In Japan Elevator’s case, they enjoy a highly advantageous position in a market ripe for consolidation while Mainfreight remains very early in their overseas expansion.
On the back of very strong performance, we trimmed the strategy’s large holdings in Mahindra & Mahindra (India: Consumer Discretionary) and Tube Investments (India: Consumer Discretionary) as they began to dominate the portfolio. We also reduced the position in Voltronic Power (Taiwan: Industrials), as valuations reached uncomfortably high levels, despite the high-quality franchise.
Finally, we exited the position in Bank OCBC Nisp (Indonesia: Financials) after re-evaluating the quality of the franchise and because we have a preference for the parent company.
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: Q2 2022
Asia Pacific and Japan Sustainability strategy update: 1 April - 30 June 2022
In markets such as these, where share prices of a particular industry, sector, or even country, move materially and as one on the back of economic headlines, the prospects for bottom-up stock selection tend to improve.
Over the quarter, we added to four names where we believe the long-term investment case remains robust but where valuations have de-rated and thus increased the potential for attractive long-term returns. The most material of these additions were to Mainfreight (New Zealand), Glodon (China) and Japan Elevator Service (Japan).
Mainfreight is an ambitious, New Zealand-based, logistics provider with one of the strongest cultures we have come across. A culture that we believe provides an enduring competitive advantage. Their passion and focus on culture is seen in the below excerpt from their recently released annual report:
The Mainfreight culture – our disciplines and style of doing business – is part of our “secret sauce”. We take a decentralised approach to business – all 305 branches measure their quality and manage their own profit and loss statements. No cross-subsidisation appears in these financials and they include interest and depreciation; there is no hiding from poor performance. Decision-making that happens close to the customer, promotion of our people from within, and sharing our profits with those who earn them are other key pillars of who we are. At all times we look to dispense with bureaucracy, helping decisions to be made quickly and efficiently.*

Mainfreight has been sold-off alongside the wider logistics industry, as the market tries to understand what growth and profitability looks like once COVID-induced bottlenecks are worked out. We now find Mainfreight trading on valuation multiples roughly in-line with industry peers, despite being meaningfully higher quality and offering far more attractive opportunities for long-term growth.
We also added to Glodon, the Chinese based-provider of software to the construction industry, as broader concerns around the property sector led to a sell-off in names with any association to the sector. Glodon should be insulated from shorter-term economic stress as its software is a key, everyday input into improving the efficiency and profitability of China’s bloated, inefficient infrastructure and construction companies. Longer term, we remain very enthusiastic about Glodon’s ability to diversify its product offering and expand its addressable market.
Japan Elevator Service (JES) plays an important role in maintaining, and improving, the efficiency and safety of Japan’s housing infrastructure, with longer-term ambitions of growing throughout India and South East Asia. A general sell-off of all things seen as “growth” in Japan has brought JES to a valuation that brings longer-term returns more in line with the opportunity to profit from growing domestic market share gains. Short-term concerns have also led to the multi-decade overseas opportunity to be largely ignored.
Over the quarter, the position in Hualan Biological Engineering (China) was sold as we failed to build conviction in the ability of the company to mitigate growing competition from state-owned players. Positions in Tata Consumer Products (India) and Voltronic Power (Taiwan) were trimmed as increasingly full valuations provided greater headwinds to longer-term returns.
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 and Japan Sustainability strategy update: 1 January - 31 March 2022
Growing inflationary pressures and the long-awaited reversal of ultra-loose monetary policy by central banks provided the conditions for short-term market participants to “sell growth” and “buy value”.
This top-down trade saw a blanket sale of all things thought of as growth, with little regard for underlying business fundamentals or valuations. We have long been nervous about the valuations being asked of businesses with no track record of, or path to, profitability; a reliance on outside capital in the form of equity raising or cheap debt; and who sell their prospects by pointing largely to top-line growth and market size. It makes sense to us that this type of “growth company” was sold-off aggressively as we now look to a world with a rising opportunity cost of capital. However, as is often the case when large parts of the market trade as one, high-quality businesses with attractive growth prospects were sold indiscriminately.
A number of high-quality Japanese companies were thrown out with this “sell growth” theme which provided us the opportunity to increase the position size of three of our current holdings: MonotaRO, Japan Elevator Service and MANI. Each of these names is a leader in their respective markets, with attractive levels of free-cash-flow generation, solid balance sheets and long-term management teams at the helm. We also added to names elsewhere in the region where we felt share price weakness failed to reflect the long-term opportunity for the compounding of growth: IndiaMART (India), Mainfreight (New Zealand), Silergy Corp (Taiwan), Techtronic Industries (Hong Kong) and Vinda International (Hong Kong).

Over the period we chose to exit a number of marginal positions in the tail of the portfolio to allow us to fund larger weightings in the following names: Dr. Reddy’s Laboratories (India), Estun Automation (China), Tokyo Electron Limited (Japan) and Xero (New Zealand). The latter two names had been reduced in weight over the last year or so on valuation concerns.
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.
Proxy voting: Q4 2022
Asia Pacific and Japan Sustainability proxy voting: 1 October - 31 December 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 74 resolutions from 15 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 believe their remuneration focuses on the shorter term rather than the longer term, and the absolute level of CEO pay, and the gap between median pay, is excessive. (two resolutions)
We voted against the election of a director to the supervisory board at Foshan Haitian Flavouring as we do not believe they are truly independent. (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 2022
Asia Pacific and Japan Sustainability proxy voting: 1 July - 30 September 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 189 resolutions from 22 companies to vote on. On behalf of clients, we voted against two resolutions.
We voted against 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. (one resolution)
We voted against the election of the chairman of the audit committee at Vitasoy as the committee met less than four times during the last fiscal year. (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: Q2 2022
Asia Pacific and Japan Sustainability proxy voting: 1 April - 30 June 2022
During the quarter, there were 258 resolutions from 33 companies to vote on. On behalf of clients, we voted against six 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 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 and Japan Sustainability proxy voting: 1 January - 31 March 2022
During the quarter there were 62 resolutions from 11 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.
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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 31 December 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: © 2014–2023 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), or enabling (supported or made possible by products or technologies provided by that company).
Investment terms
View our list of investment terms to help you understand the terminology within this document.
Fund data and information
Key documents and links
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 and Japan Sustainability Fund
Fund name | Fund type | Currency | Price | Daily change | Price date |
---|---|---|---|---|---|
Stewart Investors Asia Pacific and Japan Sustainability Class A (Acc) | OEIC | GBP | 1586.45 | -0.01 | 31 Mar 2023 |
Stewart Investors Asia Pacific and Japan Sustainability Class A (Inc) | OEIC | GBP | 280.87 | -0.01 | 31 Mar 2023 |
Stewart Investors Asia Pacific and Japan Sustainability Class B (Acc) | OEIC | GBP | 1867.27 | 0.00 | 31 Mar 2023 |
Stewart Investors Asia Pacific and Japan Sustainability Class B (Inc) | OEIC | GBP | 287.45 | 0.00 | 31 Mar 2023 |
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.