JFAM finds concentrated Asia portfolio a hit

The venerable Hong Kong-based money manager enjoys a firm record in terms of retail asset gathering with a new Asia equities product.
JF Asset Management received $490 million during the one-month launch of a new Asian equity mutual fund in Hong Kong û the biggest ever intake the firm has recorded in the territory after more than 30 years of history here. JF Asset Management is the Asian fund management brand of JPMorgan Asset Management.

The JF Domestic Opportunities Fund is a concept fund invested in a portfolio of no more than 50 stocks from Asia ex-Japan but including Australia and New Zealand. Soaring markets across the region boosted demand for the fund, which has since risen above the $500 million mark.

Joshua Tay, a veteran Singapore-based fund manager responsible for constructing the portfolio, has previously managed JFAMÆs $1.4 billion Southeast Asian equity fund, which is ranked 4 stars by the independent rating agency Morningstar Asia. Boasting minimal benchmark-tracking error, the fund employs a bottom-up strategy that focus on corporations with strong earnings in Asia, but shies away from multinationals dependent on income in foreign markets.

Terry Pan, regional head of sales responsible for overseeing the launch of the fund, says the intensity of demand surprised him. The idea of a core concentration proved a hit with a retail base that is adventurous and willing to try new things, and helped set the new launch apart from seven existing JF funds also investing in Asia ex-Japan equity.

The Asia theme remains the strongest seller in Hong Kong, he says, despite the firmÆs more global view. ôThe first thing we talk about with clients is where the global market is going, when might we see a slowdown in the US, understanding the US current account deficit. This is all before we talk about Asia. But a lot of investors are really just looking for the Asia story.ö

The high concentration in the fund is constructed to be less æindex-awareÆ than its competitors. More broad-based funds covering Asia will end up including high exposure to multinational companies generating earnings on foreign growth. ôAnd the earnings will be impaired by currency fluctuations, overseas market consumption levels and foreign economics,ö Pan explains.

With no more than 50 stocks in is portfolio, ôwe have exactly what our customers wantedö, Pan says. The fund is also meant to highlight the firmÆs active management skills.

The $490 million raised is still in process of being invested into market. No information can be disclosed of the top holdings as of this date. The fund is currently registered for sales in Hong Kong and Singapore, and the firm is considering how to offer the product in Taiwan and South Korea. The issue is complicated in Taiwan given the fundÆs exposure to mainland Chinese stocks.
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