Asia Pacific Equity Strategy 1Q 2019

04.24.2019

Key Takeaways

  • After a treacherous fourth quarter, Asia Pacific ex-Japan markets advanced strongly in the first quarter of 2019, bolstered by the U.S. Federal Reserve’s pause in rate increases and improving sentiment on U.S.-China trade tensions. The Vontobel Asia Pacific Equities Strategy outperformed the MSCI All Country Asia Pacific ex-Japan Index, which returned 11.46%. All of the Index’s eleven sectors posted positive returns for the period.
  • The consumer staples and consumer discretionary sectors had the greatest positive impact on relative returns, led by Wuliangye Yibin and Vipshop, respectively. Communication services was the most significant detractor, led by NetEase which delivered positive returns, but lagged the sector’s overall performance. From a country perspective, India was the most significant detractor from our relative returns, primarily due to our greater allocation to the country. Our holding, Housing Development Finance Corporation, India’s leading mortgage lender, was flat for the quarter. Due to its large weight, it detracted from portfolio returns. 
  • Market conditions appear to be stable. However, there are always risks that need to be monitored. We currently view rising oil prices and leverage in the Asia Pacific region as the most significant risks.
  • Our quality growth approach continues to produce alpha. By seeking to invest in businesses with sustainable competitive advantages, high barriers to entry and pricing power, we focus on what ultimately drives share price performance: earnings growth. But we must also be aware of economic forces and how changes may affect the earnings of our portfolio companies, since we are not taking a short-term view. As quality growth investors, we look for solid companies that can perform despite external forces, rather than bet on events which are impossible to predict.

Trailing Returns: Asia Pacific Equity Composite(As of 03.31.2019)

Calendar Year Returns

Since October 2009, results of the composite are compared to the MSCI All Country Asia Pacific ex Japan Index (Total Return Net Dividends). Prior to October 2009, results of the composite were compared to the MSCI All Country Far East ex Japan Index (Total Return Net Dividends).
Strategy name changed from Far East Equity to Asia Pacific Equity effective August 10, 2018.

Source: NorthernTrust
All results portrayed are expressed in U.S. dollars.
Past performance is not necessarily indicative of future results. For full disclosure and for further information regarding comparison to an index, see the Disclaimer and Performance Disclosure.