Over the past 12 months to September 8, every fund in the regional sectors (fund of funds only) produced a negative return. The best return over the period was generated by the Skandia Investment Management (IM) Far East Equity Blend fund, which fell 4.77%.
The underlying funds within the four Investment Management Association (IMA) peer groups – Asia Pacific ex Japan, Europe ex UK, Japan and North America – remain largely dominated by Skandia IM and New Star. However since the last time Fund Strategy reviewed the sectors (May 12, 2008) funds managed by Alliance Trust (AT) Asset Management (Asia Pacific) have been added to the Asia Pacific and the Japan sectors.
The Premier Alliance Japan Equity fund topped the two-fund strong Japan sector over one year after it fell 5.77% compared with the 11.63% decline made by the Skandia IM Japanese Equity Blend fund.
AT Asset Management (Asia Pacific) established in 2006, is based in Hong Kong and is a subsidiary of Alliance Trust. Anthony Muh and Jay Newman are lead managers of the Japan Equity fund, while Muh and John Lee manage the group’s second fund, Premier Alliance Asia Pacific. The two funds were launched in November 2006 and have raised £36.5m and £37.5m respectively.
The Premier Alliance Asia Pacific fund has performed less well than its Japan counterpart, falling 21.21% over the past year compared with the sector average fall in return of 16.09%. This placed the fund fourth out of four funds in the Asia Pacific sector.
Over the 12 months the best performing of the four sectors was Japan. The funds produced a mean fall of 8.7%, compared with falls of 9.4%, 9.48% and 16.09% in the Europe, North America and Asia Pacific sectors respectively. Returns from the four regional sectors over three years are less bleak, however they were down significantly compared with the last performance review in May. The best performer was Asia Pacific, which returned a collective 35.54%, however this is significantly down on the last review when the peer group returned an average 90.93%.
Topping the rankings in the Asia Pacific sector was New Star Asia with a return of 39.21%. Managed by Robert Jeffree, at just over £21m the fund is the smallest of the three offerings in the peer group. As at June 30, 2008, the fund’s biggest weighting was in cash, which represented 23.1% of the portfolio’s assets. Behind cash the top three country exposures in the fund were China at 21.5%, Taiwan at 15.1% and Australia at 10.7%.
While the Japanese sector may have been the top performer over the past year, it falls to worst over three years. Given the fact the Alliance Trust fund has yet to establish a three-year track record the sector contains only one fund, Skandia IM Japanese Equity Blend, and it fell 12.06% over the period.
The fund, like the Far East Equity Blend fund, sits in Skandia’s asset allocator fund range. To get this exposure the fund is made up of six bespoke and retail mandates, two of which are run by Schroders – Schroder Tokyo and Japan Alpha Plus. JP Morgan and Alliance Bernstein both run the two bespoke mandates, with the Old Mutual Japanese Select and Martin Currie Japan Alpha making up the sextet.
Over three years the remaining two peer groups, Europe and North America both saw significant falls in returns compared with the performance review in May. In May the average fund return in the Europe sector was 56.55%, this has dropped to 20.28%. Likewise in May the mean return in the North America sector was 18.71%, this has turned negative with the two funds in the peer group averaging a fall of 0.82%.