This is a sponsored article from Capital Group.
Capital Group has been actively investing in the Asia ex-Japan markets since 1986. More than 30 years on amid the region’s economic boom, our investments in companies domiciled in Asia ex-Japan has now grown to US$179 billion1.
As the Asian economies continue to evolve rapidly, we believe that Capital Group Asian Horizon Fund (LUX), designed to capture secular trends in this dynamic region, could help investors gain a broader exposure (a blend of strong domestic or regional companies, and global champions) to their portfolios.
In this article
Access to Asia’s full growth potential
Asia’s rapidly growing middle class and millennial generation have brought about a huge rise in demand for everything from luxury goods and health care, to financial services.
In technology, we have seen incredible innovation in e-commerce, fintech, cloud computing, and software. But some of these secular trends are under-represented in the Asia ex-Japan investment universe.
Capital Group Asian Horizon Fund (LUX) is therefore a great opportunity for investors to access the growth potential of Asia given its flexibility to invest in both local and global companies that could capture the important secular growth trends in the region.
Capturing Asia’s secular growth opportunities with the New Geography lens
The fund follows a distinctive approach to investing in Asia with access to companies across the market cap spectrum. Another unique characteristic of the fund is its ‘New Geography’ component where up to one-third of assets can be invested in companies domiciled outside of Asia ex-Japan that generate a material portion of their revenues from the region.
We believe adopting the New Geography of InvestingSM approach, which involves a fundamental understanding of where a company derives its revenues, maximises the fund’s ability to tap into the Asian investment story because many equity markets here are still developing.
An example would be the luxury goods sector where there isn’t an equivalent of Kering listed in Asia ex-Japan. Kering is a French luxury goods company that owns Gucci as well as other celebrated names like Yves Saint Laurent and Bottega Veneta. Through the New Geography lens, we can see that Asia ex-Japan has become an important part of Kering’s overall business as its revenue from the region grew from just 9% in 2010 to 34% in 2020.
Luxury goods companies with material exposure to Asia
2. As at 31 December 2020. Source: FactSet
Similarly, Asia-Pacific accounts for a significant share of automaker Volkswagen’s overall vehicle sales. But revenues are just one component of a multi-layered fundamental analysis that includes the company’s management, position in the industry, product lines, cost structures and the competitive landscape, among other factors. In the auto industry, it is important to develop a deep understanding of the supply chain ecosystem and how consumers make decisions (foreign car brands, for example, have been taking market share from local rivals in Asia amid strong consumer demand).
Motor companies with material exposure to Asia3. As at June 2020. Source: Volkswagen
4. 2020 annual sales by volume. Source: Volkswagen
5. As at August 2020. Source: Reuters
High conviction investing backed by global research
The investment team involved directly in Capital Group Asian Horizon Fund (LUX) has access to a global research network of over 60 equity analysts who between them have an average of 15 years’ industry experience (as at end-2020).
We believe that picking solid companies, backed by a well-thought-out, in-depth global research process that combines fundamental, on-the-ground research with comprehensive macro analysis, allow us to serve the long-term interests of our investors.
A holistic investment approach to fully unlock Asia’s secular growth trends
This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. The information provided is not intended to be comprehensive or to provide advice.
Companies shown are holdings in Capital Group Asian Horizon Fund (LUX) as at 31 March 2021
1 As at 31 December 2020. Source: Capital Group
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This is a sponsored article from Capital Group.