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APB Intensive 5.0: Fund selectors weigh up top ideas on ESG and healthcare

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The fifth edition of Asian Private Banker‘s Intensive event gathered over 70 individuals from the region’s fund selector community across more than 20 private banks and family offices. On 28 June, four hand-picked asset managers were given the opportunity — through eight-minute pitches — to present their ideas and products to the powerful gathering of gatekeepers.

The quick-fire, live insights into product solutions covered Asian equity ESG, sustainable cities, multi-strategy European equities, and global and regional healthcare strategies.

Below are the highlights of each fund:

BNP Paribas Sustainable Asian Cities Bond

Presenter: Yu Fu, investment specialist, emerging market fixed income, BNP Paribas Asset Management

The BNP Paribas Sustainable Asian Cities Bond aims to capture opportunities created by Asia’s increasing focus on sustainability, as well as trends related to urbanisation.

Yu Fu, BNP Paribas AM

While Fu pointed out that green bond markets in Asia were still in their infancy, the market is expected to develop. In the meantime, the fund gives investors a chance to capture the so-called ‘greenium’, or the premium they are willing to pay issuers for bonds that meet ESG criteria.

“In our view, the demand for this type will outstrip supply on the back of stronger regulatory and policy changes embracing green financing,” Fu said. The fund focuses on credit in Asia ex-Japan, and Fu pointed to this market’s “strong track-record in growth”.

“Given the current valuations, we believe that Asia represents the most compelling opportunity within emerging markets right now, and we do expect significant upside.”

The fund benefits from the input of 29 ESG experts and uses a proprietary ESG scoring framework that covers 13,000 issuers.

The fund has a 63.4% and 33.2% allocation to investment grade and high yield credit. As of 31 May, the fund yielded 5.41%.

Matthews Asia ESG Strategy

Presenter: David Dali, head of Portfolio Strategy, Matthews Asia

The Matthews Asia ESG Strategy adopts a bottom-up stock selection process combined with a sustainable investment framework to identify companies not included in major Asian benchmarks that are capable of generating positive returns.

David Dali, Matthews Asia

About half of the fund is allocated to small and mid-cap stocks, Dali pointed out, incorporating factor exposures and specific opportunities that are not found in competing strategies.

For example, as of the end of 2021, the strategy has 4.7 and three times the exposure to sustainable transport and affordable healthcare, respectively, versus the MSCI AC Asia ex Japan Index.

Dali explained that active management and engagement were crucial to the fund’s ability to generate alpha. “We believe active management is key when attempting to generate outperformance. But so is active ownership, and at Matthews, we consider engagement as a pillar of active ownership,” he said.

In 2021, Matthews Asia conducted 116 engagements with portfolio companies, double the number of 2020. Areas of engagement included climate change, environmental management, data security and shareholder communication.

The fund was launched in the US seven years ago and will shortly be made available to Asian investors. The product meets the requirements of Article 9 under the Sustainable Finance Disclosure Regulation, meaning that it has “sustainable investment as its objective or a reduction in carbon emissions as its objective”.

Dali said that the Matthews Asia has outperformed its MSCI Asian ex Japan benchmark over one-, three- and five-year timelines, earning a top quartile ranking versus its peer group.

Janus Henderson Global Multi-Strategy Fund

Presenter: Alistair Sayer, client portfolio manager, Janus Henderson Investors

The Global Multi-Strategy Fund aims to generate positive absolute returns with low to moderate volatility, as well as a low correlation to both traditional and alternative asset classes. The fund adopts a top-down strategy to manage total portfolio risk, Sayer explained, combined with bottom-up strategies that seek to benefit from market inefficiencies.

Alistair Sayer, Janus Henderson Investors

Prices of seemingly unrelated investments can become highly correlated during market stress, Sayer pointed out, leading to failure of traditional diversification. He believes that well-structured, diversified alternatives can help to spread risk across a broader portfolio.

Sayer highlighted two common investment strategies that have worked in recent years, but have foundered amid recent market turbulence. “The first one is buy-the-dip. The second one is ‘my bonds are going to diversify my equities’. Those two theories have been challenged and the problem is not going away.”

“Diversification is great. It’s wonderful, but it’s never really there when you need it,” he asserted.

Sayer highlighted how the Janus Henderson Investors fund has close to zero correlation with US credit and global equities. It also has little sensitivity to global government bonds and credit.

That strategy has contributed to positive performance for the fund during periods of market volatility, he pointed out, including in 2018, 2020, and 2022.

Bellevue Asia Pacific Healthcare (Strategy)

Presenter: Florin Boetschi, sales and distribution Asia, Bellevue Asset Management

Characterised by both its non-cyclical nature and innovation, the healthcare industry provides defensive qualities against the backdrop of an economic downturn, Boetschi argued.

Florin Boetschi, Bellevue AM

As the global population continues to age and wealthy people spend more on healthcare, the demand for high-quality healthcare is growing at a rate that is faster than other industries.

China, Japan and India are among the countries that boast cutting-edge healthcare technology and large consumer markets, Boetschi pointed out, explaining the fund’s focus on Asia-Pacific.

In terms of how Bellevue differentiates itself, the Swiss asset management counts professionals with scientific and medical backgrounds in its investment team. The fund aims to buy innovative and fast-growing companies at a reasonable price, and uses a barbell approach to diversify between markets and technologies.

“We are able to offer more nuanced, more niche types of portfolios, namely in biotechnology, in med-tech and in digital health,” Boetschi noted.

The strategy has returned 144.6% since 2006, he added, outperforming both the MSCI Asia Pacific Healthcare Index and MSCI Asia Pacific. Boetschi attributed this to the fund’s active management and willingness to deviate from the benchmarks.

If you are interested in learning more about future Intensive events, contact [email protected]