Veritas has re-opened its Asian fund to new investors after the assets under management halved in value in a year.
In October 2007 the fund was soft-closed after assets soared to $800m (GBP 519m) to protect the shareholders. However, 13 months on the fund’s assets have fallen to just over $400m.
Ezra Sun, the fund manager, says markets in Asia have fallen 60% from their peaks and sentiment has changed. Therefore, Veritas has decided to reopen the fund to offer new investors the chance to capitalise on low valuations.
He describes the market conditions as a superior entry point for long-term investors: “The investment case for Asia is stronger than ever as the region, with its higher savings rate, stronger government balance sheets and the right demographic profile, is best equipped to survive and indeed thrive from the global downturn.”
Sun (pictured) favours the Chinese and Australian markets on the fund and already had 11.5% and 23.5% respectively invested in these countries as at the end of the third quarter. He says the fiscal intervention and monetary policy in China will boost the infrastructure and consumer areas as more is spent on education, healthcare and roads.
In Australia, Sun says the government has spent a long time building up a fiscal balance to weather difficult times so the region is looking increasingly attractive.
He also says that as the Indian stockmarket continues to decline, valuations at distressed levels will provide opportunities.
Other areas with investments on the fund include South Korea (12.1%) and Taiwan (12.5%) and the largest sector weightings go to financials (19.0%) and telecommunications (19.3%).
Although he says there are long-term opportunities in Asia, he adds in the short term turmoil will continue. “Asian markets will remain volatile until we have clarity on how deep the recession in the West will be. There may be some contra-trend rallies but I think markets will be flat over the next 12 months.
“But, there is an upside from these distressed levels and we are looking at the longer-term value.”
The fund, domiciled in Ireland, reopened this week and the minimum investment for retail investors is GBP 7,000.