Standard Life's Nimmo ups SE Asia exposure in global small-caps fund
Standard Life Investments’ Harry Nimmo and Alan Rowsell are raising South East Asia positions in the Global Smaller Companies fund.
The managers use a bottom-up investment process, combining a quantitative stock-screening tool (“the matrix”) with traditional analysis, but Rowsell says it is this strategy which is locating opportunities in South East Asia.
“South East Asia is a building theme for us, although it’s only 6 per cent of the fund at the moment,” Rowsell says.
“The macro conditions in the Philippines, Indonesia and Thailand are pretty strong. Their GDP, demographics, and low debt compared to the West mean these countries outperform.”
Positions in South East Asia include Philippines-based Security Bank, which has grown to a 1.5 per cent weighting, and Thai chain Robinsons Department Stores (1 per cent).
“Security Bank is seeing strong loan growth to businesses and consumers at decent margins, unlike banks in the West, and South East Asian countries don’t have the over-indebtedness problems that we have,” says Rowsell.
“[Robinsons is] a Thai chain of department stores that is benefiting from rising consumer spending in Thailand and is expanding its number of stores around the country.”
The managers restrict initial investments in emerging market stocks to 1 per cent of the fund to control risk.
“We have been doing this since launch,” says Rowsell. “We feel this is a prudent thing to do in markets that are less liquid and are still building their track record on corporate governance.”
Launched on 19 January, the £46m fund is up 6 per cent against the 0.47 per cent rise in the IMA Global sector, according to Morningstar.
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