Asia ex Japan
Overview
Based in our Singapore office, Samir Mehta employs a fundamental-based, predominantly bottom-up investment approach. He and his team focus on Asian companies with quality, sustainable, long-term growth hallmarks, or those firms that have the potential to acquire these characteristics. These are businesses that can grow over economic and liquidity cycles and which generate high returns on the financial capital that they employ. Samir builds concentrated portfolios of typically 40-55 stocks, with low portfolio turnover and with little regard to benchmark weightings.
Investment Team
The current Asia ex Japan team has been responsible for the product since inception of the strategy at JOHCM in September 2011. Samir Mehta (Senior Fund Manager) and Cho-Yu Kooi (Senior Fund Manager) joined J O Hambro Capital Management (JOHCM) in May 2011.
Samir manages JOHCM’s Asia ex Japan (All cap) strategy and Cho-Yu is the lead fund manager responsible for the Asia ex Japan Small and Mid Cap (SMID) strategy. They are supported by a dedicated analyst, Gaurav Sharma. The team is based in Singapore to facilitate access to companies in the Asia region.
Investment Philosophy & Process
The team’s investment philosophy is based on the following beliefs:
- Value creation in a company is driven by long-term growth and the ability to generate returns above its cost of capital. The team therefore focuses on companies displaying long-term, sustainable, quality growth characteristics.
- There are pricing inefficiencies in Asian stock markets. The greatest inefficiencies are at the individual stock level. This is, therefore, where they focus their investment resources, with approximately 70% of total value added expected to come from fundamental stock selection.
Detailed analysis and regular interaction with company management is vital. The team’s analysis gives them the conviction to take a long-term investment view, meaning that turnover is low.
- Asian markets are frequently driven by macroeconomic and political factors that are separate from stock-specific considerations. These markets have a history of giving high returns but also with high volatility. The team aims to blend their growth stock focus with cyclical exposure that is valuation-driven and based on top-down views. They may also use downside protection strategies in adverse market conditions. Approximately 30% of value added is expected to come from top-down views.
The team manages concentrated portfolios with a high conviction, benchmark-agnostic style. They have never owned some of the mega cap names listed in Asia that more benchmark-aware strategies may be drawn to for risk control purposes and by virtue of their index weighting. They aim to own companies that will become future members of the major indices.
Portfolio Construction
Samir and the team build all cap portfolios of typically 40-55 holdings, with a maximum of 25-30% in any one major country and 10-15% in any one smaller country. Portfolio turnover averages 35-40%, with an average holding period of three years. Maximum stock size is 5% at purchase, although this may increase to 7% with market movements. Track error is not targeted - historically ex ante tracking error has been 6-10%.
