Asia ex Japan funds: Five questions to ask
1. How much choice is there for investors?
There are 102 funds in the Investment Association (IA) sector and 15 trusts in the Association of Investment Companies’ equivalent grouping. Many open-ended funds have equivalents – run by the same manager – in the closed-ended sector.
2. Are there less volatile funds available?
Unsurprisingly, funds that focus on producing income rather than growth have tended to be less volatile. Income offerings from the likes of Schroders, Newton and Janus Henderson have proven the least erratic in the sector over the past five years.
3. How popular have funds proven?
The IA sector has taken in a net £1.3bn over the past nine months, ranking it ahead of the Global Emerging Markets, North America and three UK sectors but behind the Japan, Europe ex UK and Global groupings.
4. What rules govern funds in the sector?
The IA says funds must hold at least 80 per cent of their assets in Asia-Pacific equities. Japanese securities are excluded from this, but portfolios can hold 5 per cent of total assets in the country to allow for flexibility in the event of company takeovers and similar.
5. Has the average fund beaten the benchmark?
In a word, no. Over five years the average open-ended fund is 1.5 percentage points behind the FTSE Asia-Pacific ex Japan index’s 59 per cent increase. Over 10 years the gap widens to 11 percentage points.
