Top fund strategies by asset class, explained
AsianInvestor's asset class awards are an important category in Asset Management Awards and provide valuable insight on outperforming investment strategies and funds.
This time around, the winners were picked from Mercer's universe of tracked strategies.
AsianInvestor used the data to hone in on strategies with funds registered in at least one location in Asia Pacific. We also took into account whether fund houses had a presence or operations in the region.
Investment performances were measured against widely tracked benchmarks for most asset classes.
Returns for 2022 were calcuated in US dollar terms before fees, even if the fund or strategy is local currency denominated.
There is little doubt that 2022 was one of the worst years for financial markets, with both public stocks and bonds falling close to 20%.
Last year stood out as the only calendar year since 1988 when returns for global equities and government bonds delivered negative returns in US terms, according to Mercer.
Risk-adjusted returns for 60/40 portfolios in general have been worst in periods of low growth and inflation above 4%, like last year, it noted.
Within the equity space, the value style performed relatively well in 2022, and exposure to technology stocks represented a big detractor for some managers.
Correlations between equities and bonds increased substantially last year, removing a source of diversification in portfolios.
But the last two decades of low correlations between equities and bonds has actually been the exception rather than the rule if we go back much further in history, Mercer said.
More broadly, diversification from traditional betas did pay off in 2022 after lagging traditional markets for a long period before 2022, the investment consultancy said.
Overall, managing to beat commonly accepted benchmarks in incredibly challenging conditions is definitely high accomplishment for the winners of these awards.
In a few sub-categories, the editorial team chose a winner as well as a finalist because the performance of both strategies in 2022 was commendable.
AsianInvestor would like to once again thank Mercer for providing the data and for their deep and valuable insights.
Disclaimer: It is possible a strategy may have performed very well in 2022, yet performed poorly for the five years before. A strong or weak performance in 2022 may not be related to manager skills, and can be due to specific manager constraints. Return is only one of the relevant metrics to look at in evaluating performance and doesn't inform our understanding of risk-adjusted returns.
Asia ex-Japan Equity
The winner was Maple-Brown Abbott’s Asian Equity Income strategy, which shed 5.7%, while the finalist Eastspring’s Asia Dynamic Equity strategy was close behind with a 5.8% loss.
The benchmark MSCI AC Asia ex-Japan index lost 19.7%.
The Maple-Brown Abbott fund aims to create a low-volatility portfolio focused on quality companies offering sustainable income streams across Asia.
The Eastspring fund invests in a concentrated portfolio of equities, equity-related securities, bonds and currencies of companies that are incorporated, listed or have significant operations in Asia Pacific.
Asian Fixed Income – Local Currency
The winner was Nikko Asset Management’s Asia local currency bonds strategy, which slipped by 7% yet outperformed the benchmark iBoxx Asia local currency bond index, which shed 7.4%.
Nikko AM's strategy invests primarily in local currency denominated bonds issued by sovereigns, quasi-sovereigns, banks and corporate of Asian nations.
The winner was First Sentier's FSSA China A Shares fund, which lost 15.5%, yet beat the benchmark MSCI China A Onshore index, which dropped 27.20%.
The fund invests primarily in equity securities or equity-related securities issued by companies with either assets in or revenues derived from China and are listed and traded on Chinese stock exchanges.
China Domestic Fixed Income
The winner was Manulife Investment Management’s CNY Bond strategy, which slipped 4.9%, outperforming the benchmark iBoxx ALBI China Onshore index, which dropped 5.3%.
Manulife's strategy focuses on investing primarily in fixed-income securities issued by the Chinese government, agencies, supranational organisations and corporate securities listed in China.
Emerging Market Equity
The winner is Eastspring’s Global Emerging Markets Dynamic (USD) fund, which rose 0.3%, against a 20.1% drop in the benchmark MSCI Emerging Markets (net) index.
The fund aims for long-term capital growth through a concentrated portfolio of equities, equity-related securities and bonds of companies with significant operations in emerging markets.
Emerging Market Debt
The winner is PGIM’s Fixed Income Emerging Markets Debt Long/Short strategy, which gained 6.5% in 2022.
The strategy aims to maximise total return in excess of the US 3-month treasury bill index on a risk-adjusted basis over a full market cycle.
The winner was the Sompo Japan Equity Value Core strategy, which shed only 3.1% in 2022, outperforming the benchmark Topix index, which dropped 14.9% over the same period.
Launched in 1998, the strategy is Sompo's longest running, and the largest offering in Japanese equitites for institutions.
Real Estate Investment Trust
The winner was PGIM’s Real Estate Income Strategy, which dropped 15.2%, beating the FTSE NAREIT ERPA Developed Index, which fell 24.4% in 2022.
The fund looks for income opportunities from real estate securities around the globe.
Real estate (Asia-Pacific headquartered)
The Lendlease Australian Property Fund Industrial gained 13.9% in 2022,while finalist GPT Wholesale Shopping Fund Centre Fund rose 10.99%.
The Lendlease fund, established in 1996, is a core wholesale unlisted property trust.
It invests in predominantly core industrial properties across Australia, such as warehouses and infrastructure such as roads, airports and central business districts.
The GPT fund, established in 2007, It invests in shopping centre assets, primarily across Australia’s eastern seaboard states.
Both entities are Australian. The funds are not managed against any relative benchmark.
Infrastructure (Asia-Pacific headquartered)
The winner, Palisade Investment Partner’s Australian Social Infrastructure Fund, gained 15.35%, while finalist Macquarie International Infrastructure Securities Fund climbed 8.79%.
Palisade’s fund is a core fund that invests in Australian infrastructure, cleantech, life sciences, technology, media and telecommunications, and networking sectors. It is not managed against any relative benchmark.
The Macquarie fund provides exposure to a global portfolio of infrastructure securities which are listed, or expected to be listed, and issued by entities whose primary focus is managing, owning or operating infrastructure and utilities assets.
Both are Australian managers.