ASI launches Asia Pacific impact fund as ESG outperforms in the region

MSCI AC Asia Pacific ESG Leaders has almost doubled the returns of MSCI AC Asia Pacific during the coronavirus


Aberdeen Standard Investments has launched an impact fund focused on Asia Pacific companies.

The Aberdeen Standard Sicav I – Asian Sustainable Development Equity fund will invest in a portfolio of 30-60 high-conviction stocks, according to a media statement.

The managers will focus on quality companies that address issues highlighted by the United Nations’ Sustainable Development Goals (SDGs), which were introduced in 2016, and are meant to help tackle issues such as poverty, inequality and climate change.

A spokeswoman told Portfolio Adviser sister publication Fund Selector Asia that “the fund will include exposures in developed markets such as Australia and Singapore, emerging markets including China and India, and frontier markets such as Vietnam and Bangladesh.”

“Overall, we expect to be invested in about 14 countries in Apac, and sector exposure will be diversified across most major market segments including technology, financials, healthcare and consumer stocks,” she said.

The MSCI AC Asia Pacific ex Japan index, rather than an ESG index, is the fund’s benchmark.

Responsibility for the day-to-day running of the product rests with the firm’s Asia-Pacific responsible investment portfolio construction group, led by ASI head of corporate governance, Asia Pacific, David Smith. He will be supported by the Scotland-based firm’s 50-strong Apac equities team, headed by Flavia Cheong (pictured), said the spokeswoman.

Cheong also leads the team that manages the $2.6bn Aberdeen Standard Sicav I Asia Pacific Equity Fund, which has generated a three-year cumulative return of 18.79%, slightly better than its benchmark MSCI AC Asia Pacific ex Japan index (18.01%), and is outperforming so far this year, up 6.37% compared with 5.97% by its index, according to FE Fundinfo.

But, Apac ESG indices have achieved stronger returns than the region’s conventional indices over three years and held up well during the Covid-19 outbreak, FE Fundinfo data shows.

In particular, ESG leader strategies have benefited from low or zero exposure to gaming, alcohol, and fossil fuel stocks, and high allocation to “new economy” stocks, which have profited from stay-at-home consumption trends.

The ASI fund will use the firm’s “eight-pillar framework” for assessing a company’s level of conformity to the SDGs, comprised of: circular economy, sustainable energy, food and agriculture, water and sanitation, health and social care, financial inclusion, sustainable real estate and infrastructure, and education and employment.

Comparative performance of Apac indices

Index Year-to-date return 3-year return 5-year return Annualised volatility*
MSCI AC Asia Pacific ESG Leaders 6.52% 23.04% 68.45% 16.67%
MSCI AC Asia Pacific 3.37% 17.31% 59.20% 17.32%
Aberdeen Standard Asia Pacific Equity Fund 6.37% 18.79% 45.12% 18.16%
MSCI AC Asia Pacific ex Japan 5.97% 18.01% 69.73% 18.24%
Source: FE Fundinfo. Data in US dollars to 26 August 2020. *annualised over three years.

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