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: Q3 2023
Asia Pacific Sustainability strategy update: 1 July - 30 September 2023
Over most three-month periods, there should be relatively little change in the portfolio. We aim to build resilient portfolios of high-quality companies with diversified streams of cash flows that have the ability to grow in value over the long term. High-quality companies at reasonable valuations tend not to come along too often. In the absence of such opportunities, we are very comfortable long-term owners of companies in the portfolio.
During the quarter we initiated positions in three companies. Hangzhou Robam (China: Consumer Discretionary) manufactures kitchen appliances. The company is founder owned and managed with politically uncontentious stewards and products. It has a dominant position in the manufacture of oven hoods which generate impressive cash flows that are being invested into lowly penetrated markets such as dishwashers. Midea (China: Consumer Discretionary) is a manufacturer of home appliances. Midea is a high-quality franchise where the stewards are investing cash flow from their dominant market position, in exciting new technologies and automation to enhance growth prospects. We also initiated a position in Samsung Electronics (South Korea: Information Technology). We have long admired the strength of the Samsung Electronics franchise which should benefit from strengthening geopolitical headwinds and a desire to reduce dependence on Taiwanese manufacturers. Samsung Electronics demonstrates an impressive ability to generate cash and boasts a solid balance sheet. A recent visit to South Korea prompted a reappraisal of the quality of governance which has improved significantly.
We also added to positions in Zhejiang Supor (China: Consumer Discretionary), Glodon (China: Information Technology), HDFC Bank (India: Finanicals), Voltronic Power (Taiwan: Industrials) and Telkom Indonesia (Indonesia: Communication Services). There is no commonality or theme to these additions, they are simply high-quality companies at reasonable valuations.
We sold holdings in Foshan Haitian Flavouring (China: Consumer Staples) where we have increasing concerns about franchise development and BRAC Bank (Bangladesh: Financials) due to rising regulatory headwinds for the banking sector in Bangladesh.
To control position sizes we trimmed Tube Investments (India: Consumer Discretionary), Mahindra & Mahindra (India: Consumer Discretionary) and Shenzhen Inovance Tech (China: Industrials). We also reduced Kingmed Diagnostics Group (China: Health Care) on increasing concerns about governance.
Strategy update: Q2 2023
Asia Pacific Sustainability strategy update: 1 April - 30 June 2023
Over most three-month periods, there should be relatively little change in the portfolio. We aim to build resilient portfolios of high-quality companies with diversified streams of cash flows that have the ability to grow in value over the long term. High-quality companies at reasonable valuations tend not to come along too often. In the absence of such opportunities, we are very comfortable long-term owners of investee companies.
We initiated a new position over the quarter with the purchase of Telkom Indonesia (Indonesia: Communication Services). Telkom Indonesia has a strong track record of growth and profitability sitting as the backbone of Indonesia’s digital growth. Telecoms is notoriously a tough industry as there is little in the way of differentiation between what tend to be equally matched players. In Indonesia, Telkom has significant market leadership in a consolidated market providing them valuable cash flows to reinvest in growth ahead of peers. Telkom is also a unique example of a telecom company that has a robust, near-net cash balance sheet.
We also started a position in Cyient (India: Information Technology), as we believe, under a new management team, the company has set itself on a clear path of improvement as they refocus their efforts on becoming a leading provider of outsourced engineering services.
Our Chinese holdings have been whipped around in recent months as short-term views shift on a daily basis on whether there is evidence of a post-covid economic recovery and what stimulative polices the government will resort to. The Chinese stock market is dominated by state-owned enterprises. These companies trade on very low valuation multiples – rightly in our view – which when viewing the Chinese market purely from a top-down perspective, muddies the picture on what valuations are being asked of privately owned, high-quality franchises. We are starting to see such companies approach valuations that we are comfortable paying. But on the whole, we do not yet see the bargain valuations that tend to come up when there is genuine fear in a market. We added to our positions in Shenzhen Inovance (China: Industrials) and Amoy Diagnostics (China: Health Care) as top-down macro-driven concerns helped depress valuations.
We also added to our holding in Aavas Financiers (India: Financials). We believe Aavas has a fantastic opportunity to generate very attractive levels of long-term growth thanks to their leadership in providing low-cost mortgages to low-income households in India: a market where mortgage penetration is around 11% compared to over 60% in the UK1. We have a lot of respect for the conservative manner in which Aavas has built its balance sheet, which helps provide resilience in times of stress while also reducing the cost of providing mortgages which Aavas then passes on to customers.
To fund these transactions we trimmed two of our Indian holdings: Infosys (India: Information Technology) and Tube Investments (India: Consumer Discretionary).
1 Source: Aavas Annual report 2022-2023
Strategy update: Q1 2023
Asia Pacific Sustainability strategy update: 1 January - 31 March 2023
During the quarter, we initiated a new position in Zhejiang Supor (China: Consumer Discretionary), a leading manufacturer of cookware and small domestic appliances in China.
The company is majority owned (82%) by a French cookware manufacturer1, has a good track record of profitable growth and impressive cash conversion. The franchise is well placed to gain share in a market that is growing steadily.
Towards the end of last quarter, we began the process of initiating positions in two companies: Aavas Financiers (India: Financials), an extremely impressive owner-founder managed business that specialises in the provision of housing loans to customers mostly in rural India; and ResMed (United States: Health Care), a global leader in sleep and breathing solutions, and technology which helps people with sleep apnoea and chronic pulmonary and respiratory diseases.
We added to positions in Yifeng Pharmacy Chain (China: Consumer Staples), Shenzhen Inovance Tech (China: Industrials), Syngene (India: Health Care) and Mainfreight (New Zealand: Industrials).
In order to control position size, we reduced holdings in Tech Mahindra (India: Information Technology), Mahindra & Mahindra (India: Consumer Discretionary), Bank Central Asia (Indonesia: Financials) and Tube Investments (India: Consumer Discretionary). We also reduced Koh Young Technology (South Korea: Information Technology) after reflecting on the quality of the culture.
We sold out of Techtronic Industries (Hong Kong: Industrials) after reflecting on the quality of the management, and Public Bank (Malaysia: Financials), as we identified better risk-reward opportunities in other new investments.
1 Source: Zhejiang Supor annual report 2021
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).
Proxy voting: Q3 2023
Asia Pacific Sustainability proxy voting: 1 July - 30 September 2023
During the quarter there were 200 resolutions from 27 companies to vote on. On behalf of clients, we voted against four resolutions.
We voted against the election of the Chair of the Nomination Committee at Hangzhou Robam in support of encouraging better gender diversity. At present the company has no female directors, and we believe the Chair of the Nomination Committee has an important role in facilitating a more gender diverse Board of Directors. (one resolution)
We voted against a related party transaction at Kingmed Diagnostics Group which would transfer 73% ownership of a subsidiary pharmaceutical company to the Deputy General Manager of the listco. We could not find any reasons behind the sale nor the valuation at which the transaction would happen. (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 appointment of the auditor and the company’s ability to set auditor fees at Vitasoy as they have been in place for over 10 years and the company has given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and follows best practice. (one resolution)
Proxy voting: Q2 2023
Asia Pacific Sustainability proxy voting: 1 April - 30 June 2023
During the quarter there were 321 resolutions from 38 companies to vote on. On behalf of clients, we voted against 14 and abstained on one resolution.
We voted against Aavas Financiers' request to reprice options granted under various equity stock option plans for employees due to a share price fall. We do not believe this request is in shareholders’ interest. (three resolutions)
We voted against BRAC Bank’s request to increase authorised share capital by more than 100%, as the company had not given any justification for why they are doing this at the time of voting. (one resolution)
We voted against Foshan Haitian Flavouring’s request to approve connected transactions entered into between the Company and related entities and their respective annual caps. We do not believe these requests are in shareholders’ interests. (two resolutions)
We voted against the appointment of the auditor Foshan Haitian Flavouring, Glodon, Selamat Sempurna, Telkom Indonesia and Yifeng Pharmacy Chain as they have been in place for over 10 years and the companies have given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and follows best practice. (five 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)
We voted against Vinda International’s request to issue shares without pre-emptive rights and issue repurchased shares, as the share discount rate had not been disclosed. (two resolutions)
We abstained from voting on the appointment of Kalbe Farma’s auditor and their request to set auditor fees as at the time of voting the company had not disclosed the name of the auditing firm. (one resolution)
Proxy voting: Q1 2023
Asia Pacific Sustainability proxy voting: 1 January - 31 March 2023
During the quarter, there were 53 resolutions from ten companies to vote on. On behalf of clients, we voted against one resolution.
We voted against Amoy Diagnostics’ request to increase share capital and share count as we did not have sufficient information at the time of voting for the justification of these amendments to articles. (one resolution)
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)
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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 investee companies* 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 as at 30 September 2023. *Assets that the strategies may hold which an active decision has not been made, and sustainability assessment does not apply, include cash, cash equivalents, short-term holdings for the purpose of efficient portfolio management and holdings received as a result of mandatory corporate actions. Holdings of such assets will not appear on Portfolio Explorer.
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||Factsheet|
|Stewart Investors Asia Pacific Sustainability Class A (Acc)||OEIC||GBP||729.68||0.37||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class B (Acc)||OEIC||GBP||816.78||0.37||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class B (Acc)||OEIC||EUR||131.30||0.33||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class A (Acc)||OEIC||EUR||451.38||0.33||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class I (Acc)||Irish UCITs||EUR||11.71||0.22||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class I (Acc)||Irish UCITs||USD||10.10||0.34||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class VI (Acc)||Irish UCITs||EUR||3.53||0.22||08 Dec 2023|
|Stewart Investors Asia Pacific Sustainability Class VI (Acc)||Irish UCITs||USD||13.33||0.34||08 Dec 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.