Asia holds a great position in today’s investment landscape, with the region an obvious attraction for those seeking growth away from western markets, such as the US and Europe, which have been experiencing signs of a slowdown in recent months.
The Investment Association’s Asia Pacific ex Japan sector currently holds 120 equity funds across different providers. In common with other sectors, there are passive strategies to be found here – although the sector is dominated by active managers seeking exciting opportunities in a region that is experiencing continuous growth and economic development.
From a pure style perspective, with growth stocks having largely outperformed their value counterparts since the global financial crisis, there are typically more growth-oriented strategies than value funds today as the appeal of the former has inevitably grown for many investors.
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We have also seen a small but growing number of responsible funds emerge in recent years. Some are passive, some are active and can include, for instance, a range of exclusions, such as tobacco and gambling, and/or solely focus on companies providing solutions to environmental or social issues.
Macroeconomic backdrop
The region is characterised by rapid economic growth and technological advancement. Investors specialising in Asia point to the benefits on offer there – such as the favourable demographics in India, which includes a young, skilled population and the growth of the middle class, leading to increased productivity and spending.
In light of these factors, economies in the region have prioritised growth policies to attract investment. As an example, during the past few decades, there has been a notable expansion in technology and innovation, with the rise of global giants, such as Samsung in South Korea and TSMC in Taiwan, which now play significant roles in global manufacturing and trade.
Read the full article in Portfolio Adviser’s July/August 2023 magazine
