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This information is a financial promotion for the Stewart Investors Asia Pacific Sustainability Strategy intended for retail and professional clients in the UK only.
Investing involves certain risks including:
- The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
- Currency risk: the Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund and could create losses. Currency control decisions made by governments could affect the value of the Fund's investments and could cause the Fund to defer or suspend redemptions of its shares.
- Specific region risk: investing in a specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
- Emerging market risk: Emerging markets tend to be more sensitive to economic and political conditions than developed markets. Other factors include greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.
Where featured, specific securities or companies are intended as an illustration of investment strategy only, and should not be construed as investment advice or a recommendation to buy or sell any security.
For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document.
If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.
- Quarterly update
- Proxy voting
- Portfolio Explorer
- Fund information
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
Strategy update: Q4 2022
Asia Pacific Sustainability strategy update: 1 October - 31 December 2022
Over the course of the quarter we started a new position in 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.
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).
We took advantage of reduced COVID restrictions to visit Japan and South Korea during the quarter. 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 Info Edge (India: Communication Services) due to valuations.
For valuation reasons we reduced Dabur (India: Consumer Staples), Marico (India: Consumer Staples), Infosys (India: Information Technology), Kotak Mahinda Bank (India: Financials) and Elgi Equipments (India: Industrials). To control the position size we trimmed Mahindra & Mahindra (India: Consumer Discretionary).
Strategy update: Q3 2022
Asia Pacific 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.
Marginal positions in Estun Automation (China: Industrials) and Mahindra Logistics (India: Industrials) were sold over the period: Estun reached uncomfortably high valuations while Mahindra Logistics was sold to make way for higher-quality ideas. Proceeds from these sales were used to add to holdings at lower valuations such as: OCBC Bank (Singapore: Financials), Kalbe Farma (Indonesia: Health Care), HDFC (India: Financials), Mainfreight (New Zealand: Industrials), and Unilever Indonesia (Indonesia: Consumer Staples).
During the quarter, two new investments were initiated for the strategy. The first is a leading hotels franchise in India. The company is stewarded by long-term owners who have spent the recent down cycle in tourism and hospitality making the business leaner and stronger. With the most iconic brand in the country, a franchise that is becoming more asset light through management contracts, and with the potential for a recovery in hospitality and tourism, we believe there is a long runway here for growth in profitability of the core business.
The second is an Indian IT services and embedded software provider focused on the automotive sector. The two co-founders of the company remain in the position of Chair and CEO and have consistently managed the business for the long term, building strong relationships with key automotive original equipment manufacturers (OEMs) globally. They have recently taken a decision to shrink the business to a third of its original revenue base – a difficult decision in the short term, but one that ensures a focus on their core competence in auto engineering over the long term. To us, this is a great indicator of stewards who can resist short-term market pressures to build sound, sustainable franchises. The company’s focus is on software and services related to electric vehicles and automated driving systems, benefiting from a long runway for growth in the coming years.
Strategy update: 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.
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.
Proxy voting: Q4 2022
Asia Pacific Sustainability proxy voting: 1 October - 31 December 2022
During the quarter there were 72 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)
Proxy voting: Q3 2022
Asia Pacific Sustainability proxy voting: 1 July - 30 September 2022
During the quarter there were 214 resolutions from 27 companies to vote on. On behalf of clients, we voted against three 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 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)
Proxy voting: 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)
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)
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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).
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
|Fund name||Fund type||Currency||Price||Daily change||Price date|
|Stewart Investors Asia Pacific Sustainability Class A (Acc)||OEIC||GBP||754.29||-0.15||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class B (Acc)||OEIC||GBP||839.28||-0.15||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class I (Acc)||IRVCC||EUR||11.84||0.10||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class VI (Acc)||IRVCC||EUR||3.55||0.10||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class VI (Acc)||IRVCC||USD||13.53||0.32||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class A (Acc)||OEIC||EUR||454.68||0.20||27 Jan 2023|
|Stewart Investors Asia Pacific Sustainability Class B (Acc)||OEIC||EUR||131.62||0.21||27 Jan 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.