Rich pickings for investors in Asian markets

EXPERIENCED fund manager Ewan Markson-Brown is confident that the stock markets of Asia will reap investors rich rewards over the next few years as the region’s economies benefit from a growing middle class – and widespread digitalisation across swathes of industry.

After a successful seven years running the Pacific Fund for Scottish-based Baillie Gifford, Markson-Brown has joined London-based Crux Asset Management and set up the Crux Asia ex-Japan Fund.

Launched last October, the fund has already attracted nearly £100million from investors, primarily on the back of MarksonBrown’s track record at Baillie Gifford. Over May 2014 to June 2021, he was responsible for generating returns of 250 per cent for Baillie Gifford Pacific Fund investors – in the process outperforming most rivals and the MSCI Asia Index ex-Japan. He hopes to repeat this success at Crux.

‘The Crux fund is now fully invested,’ says Markson-Brown, who is being assisted in managing the fund by Damian Taylor, recruited from investment house Martin Currie. ‘We’ve built a diversified portfolio of some 85 stocks and it’s full of good growth ideas. We will run with the winners and in time get rid of any losers.’ The initial portfolio has a bias towards China – which will not appeal to all investors given the country’s poor human rights record. But the fund has also accumulated key stakes in some companies widely known to UK investors – the likes of Samsung Electronics (manufacturer of the Galaxy smartphone); savings specialist ICICI Bank; and Tata Motors.

Although Markson-Brown and Taylor are stock-pickers, there are key investment themes that dominate the portfolio. These include digitalisation and the green revolution.

Among the fund’s top holdings is Singapore-based internet company Sea Limited. ‘This company is the largest e-commerce business in some of the region’s burgeoning economies such as Indonesia,’ says Markson-Brown. ‘It is also expanding its operations into Latin America and across Europe into countries such as Poland. Its management team is world class and it’s way ahead of competitors. It’s the kind of growth company we like.’

Another top ten stake is in Samsung SDI, a provider of batteries to leading electric car manufacturers such as BMW. The fund also has investments in some of the mining companies that provide the metals – nickel, copper and lithium – essential to electric car production. Australian-based Nickel Mines is its biggest stake in the mining sector.

Chinese companies dominate, accounting for more than a third of the fund. Markson-Brown says the regulatory headwinds that helped depress the Chinese stock market last year are slowly dissipating, providing the opportunity to buy some growth companies at cheap prices. They include the likes of Chinesebased logistics company Milkyway Chemical Supply Chain. The fund’s total annual charges are reasonable at 0.7 per cent and the fund can be bought via major investment platforms such as AJ Bell and Hargreaves Lansdown.

For investors who like the idea of investing in Asian stock markets, but prefer to invest via a more established fund, scrutineer FundCalibre says sound options include Fidelity Asia Pacific Opportunities, Matthews Pacific Tiger and JPM Asia Growth.

Crux, established seven years ago, now manages eight funds, the most high-profile being the £870million European Special Situations run by former New Star and Henderson managers Richard Pease and James Milne.