Asia Pacific Leaders Sustainability
The Asia Pacific Leaders strategy invests in large and mid-sized companies which generally have a total stock market value of at least US$1 billion.
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- Quarterly update
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The Asia Pacific Leaders strategy was originally launched in December 2003 and invests in large and mid-sized companies which generally have a total stock market value of at least US$1 billion (hence ‘Leaders’).
This equity-only strategy seeks to invest in between 30 to 60 high-quality businesses in the Asia Pacific region (including Australia and New Zealand, but excluding Japan) that are helping bring about a more sustainable future.
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: Q1 2023
Asia Pacific Leaders Sustainability strategy update: 1 January - 31 March 2023
We invested in two new high-quality franchises in the first quarter of 2023.
The first is Yifeng Pharmacy Chain (China: Consumer Staples), a pharmaceutical retail chain in China. It is stewarded by a competent and honest founder who, alongside many employees, continues to own shares. The franchise and balance sheet are robust and the company benefits from strong sustainability tailwinds - increasing access to medicine. The company is also aligned with government ambitions to consolidate and improve the efficiency of this fragmented industry. The second investment is Infineon Technologies (Germany: Information Technology), which is listed in Germany but derives more than 60% of its revenue from customers in the Asia Pacific region.1 Infineon Technologies manufactures semiconductors which are well placed to benefit from increasing demand for electric vehicles and for the smart, green and efficient conversion of electrical energy.
We also made additions to three existing holdings in China: Shenzhen Inovance Tech (Industrials), Foshan Haitian Flavouring (Consumer Staples) and Glodon (Information Technology). Each of these are well-stewarded and high-quality franchises that are distant from the commanding heights of authority. They each possess net cash balance sheets and benefit from strong sustainability tailwinds.
During the quarter, we trimmed Bank Central Asia (Indonesia: Financials) and Marico (India: Consumer Staples) because of valuations. We sold out from our holdings in Techtronic Industries (Hong Kong: Industrials) after reflecting on the quality of the management, and Public Bank (Malaysia: Financials), a comparatively new addition to the strategy, because we identified better risk-reward opportunities in other new investments.
1 Source: Infineon annual report 2022
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: Q4 2022
Asia Pacific Leaders Sustainability strategy update: 1 October - 31 December 2022
Renewed investor interest in Chinese equities challenged performance in the last quarter of 2022.
This was caused by government policy backtracking in the property and internet sectors, and the sudden end of the zero-COVID policy. The CSI 300 Index, a broad measure of Chinese equities, rebounded by 13% in local terms and was one of the strongest performers in the region1. We have no ability to predict changes in government policy and it has not changed our opinion about the quality of any of the companies held in the strategy.
Well-documented, top-down concerns about Chinese growth created the opportunity to add to a few of our mainland-listed companies (Glodon: Information Technology – software for the construction industry; Kingmed Diagnostics Group: Health Care – independent diagnostic laboratories; Shenzhen Inovance Tech: Industrials – Industrial Automation) as well as Silergy Corp (Information Technology), a Taiwanese-listed designer and manufacturer of analog semiconductors with material exposure to China.
During the quarter we visited Japan and South Korea. Disappointing meetings with Nippon Paint (Japan: Materials) and Naver (South Korea: Communications Services) prompted the complete sale of both companies as we failed to build conviction in quality and sustainability positioning. We also sold Amoy Diagnostics (China: Health Care) after a reappraisal of the liquidity of the shares.
For valuation reasons we reduced Delta Electronics (Taiwan: Information Technology), Advantech (Taiwan: Information Technology), Dabur (India: Consumer Staples) and Tata Consultancy Services (India: Information Technology). To control the position size we trimmed Mahindra & Mahindra (India: Consumer Discretionary).
Proceeds from these transactions provided an opportunity to initiate a position in ResMed (United States: Health Care), a global leader in sleep and breathing solutions, and technology which helps people with sleep apnoea and respiratory diseases.
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: Q3 2022
Asia Pacific Leaders 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.
The position in OCBC Bank (Singapore: Financials) was increased as we believe the bank to be extending its lead as the most forward-thinking bank in the region when it comes to incorporating sustainability-thinking into its operations. These decisions manifest themselves in many ways, from improving the quality of their balance sheet to gaining exposure to leading companies in sectors that enjoy attractive structural tailwinds from sustainable development.
We exited our holdings in both Estun Automation (China: Industrials) and Chroma ATE (Taiwan: Information Technology). Although we believe Estun to be well positioned to benefit from the growing investment in automation in China, valuations more than reflected this growth opportunity. Chroma was sold as we failed to build conviction to take it from a marginal position in the tail of the portfolio. Similar to Estun, the position in Pidilite Industries (India: Materials) was trimmed as extended valuation levels reduced the opportunity for attractive long-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: Q2 2022
Asia Pacific Leaders Sustainability strategy update: 1 April - 30 June 2022
The second quarter of 2022 was extremely volatile and mostly weak for equities.
Inflation is less acute in Asia, and while regional equities did not fall as much as global peers, they are down around 10% in USD terms1 according to broad measures. Investor fears of recession, aggravated by war in Ukraine and increasing commodity prices, appear to be rising. Within this context our philosophy and process stayed exactly the same and we added to high-quality companies at attractive valuations.
During the second quarter, we increased the position size of three existing holdings. The first was OCBC Bank (Singapore), an excellent financial services franchise in Singapore, Malaysia, Indonesia and Greater China, stewarded by the Lee family. The second was Shenzhen Inovance Tech (China), an innovative engineering company with strong sustainability tailwinds. The third was Public Bank (Malaysia), one of the finest banking franchises in Malaysia and an indirect beneficiary of rising commodity prices.
We did not add any new companies during the period. But we note, with anticipation, an increasing number of high-quality franchises with good prospects at more enticing valuations.
Not all equities in the region fell. We trimmed Mahindra & Mahindra (India) and Tata Consultancy Services (India), two of the strategy’s largest holdings, to control position size. We also reduced Altium (Australia) for reasons of valuation.
We sold Hualan Biological Engineering, having re-evaluated the quality of the franchise amidst a more competitive landscape.
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: Q1 2023
Asia Pacific Leaders Sustainability proxy voting: 1 January - 31 March 2023
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter, there were 48 resolutions from eight companies to vote on. On behalf of clients, we did not vote against any 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.
Proxy voting: Q4 2022
Asia Pacific Leaders Sustainability proxy voting: 1 October - 31 December 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 53 resolutions from 11 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 Leaders Sustainability proxy voting: 1 July - 30 September 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 111 resolutions from 17 companies to vote on. On behalf of clients, we voted against two resolutions.
We voted against the election of a director at Dabur as we do not believe they are truly independent. (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 Leaders Sustainability proxy voting: 1 April - 30 June 2022
During the quarter, there were 276 resolutions from 29 companies to vote on. On behalf of clients, we voted against eight 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)
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 March 2023.
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
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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 Leaders Sustainability Fund
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.
