Morley has altered the investment process used by its range of 14 Asian (ex Japan, Australia and New Zealand) portfolios. In an attempt to bolster performance, the group has applied the investment process used by its emerging markets team, headed by Mark Artherton, onto its Asian equity funds.
Funds affected by the change, which took place more than a month ago include the $126m (£62m) Aviva Morley Asia-Pacific Equity fund and $1.9 billion Aviva Morley Emerging Markets Equity fund. Both funds are part of the Aviva Morley Sicav, which are domiciled in Luxembourg, but they carry distributor status for British investors.
Artherton says that as result of the change in investment process, the way the funds allocate assets and select stocks have both changed.
“Previously, the Asian funds were run on a neutral country basis to their benchmarks,” says Artherton. “Now we have applied the successful asset allocation process we use on our emerging market funds. About one-third of outperformance on emerging markets is expected from how we allocate assets in certain countries, and we expect the same to happen in Asia.”
As a result of this Artherton says about 20% of the various Asian portfolios were turned over. Favoured countries include South Korea, China and Taiwan, while for those funds able to invest in it, India is an underweight.
In terms of stock selection, Artherton says that the Asian funds use the emerging market team’s “14 Sigma” approach.
“This looks at 14 factors that we think are important in driving a company’s share price performance. Four of these are valuation factors, six are judgement/macro calls and the remaining four concern the financial aspects of the company,” he says.