Asia-Pacific Growth Equity Fund — ex-China

Asia-Pacific Growth Equity Fund: Diversified Asian Growth, Excluding China

Asia-Pacific equity markets outside China represent one of the most structurally compelling opportunities in global equity investing. The economic rise of India, the technological sophistication of Japan and South Korea, the dynamic consumer markets of ASEAN, and the stability and resource wealth of Australia collectively constitute an equity universe of extraordinary breadth — yet it remains systematically underrepresented in most international investors' portfolios.

This actively managed fund invests in listed growth companies across the Asia-Pacific region, explicitly excluding Chinese equities (both mainland A-shares and Hong Kong-listed stocks), targeting a gross return of 12–18% per annum over a full market cycle.

Why Exclude China?

The decision to exclude Chinese equities is deliberate and reflects genuine risk management rather than a political judgement. Since 2020, several structural concerns around Chinese equities have crystallised:

Regulatory risk: Sudden and sweeping regulatory interventions — in technology, private tutoring, property, and financial services — demonstrated that the regulatory risk premium in Chinese equities is materially higher than previously appreciated by global investors.

Geopolitical risk: Escalating US-China tensions, the risk of sanctions in a Taiwan scenario, and restrictions on Western institutional ownership of certain Chinese securities categories represent non-financial risks that are difficult to price but potentially very large in impact.

Corporate governance: Questions around VIE structures (the legal mechanism through which foreigners own shares in Chinese companies), audit transparency, and related-party transactions have not been fully resolved.

For investors seeking Asian growth exposure without these specific risks, an ex-China mandate provides the structural growth of the broader region without the China risk premium.

Market Allocation

India (approximately 30–40% of the portfolio): India is the world's most populous country, the fastest-growing major economy, and host to an extraordinarily dynamic listed equity market spanning technology services, financial inclusion, consumer staples, healthcare, and infrastructure. India's structural growth story — rising incomes, rapid digital adoption, manufacturing diversification away from China — provides a multi-decade tailwind for quality businesses.

Japan (approximately 20–25%): Japan's equity market renaissance — driven by corporate governance reforms, share buybacks, and genuine earnings growth from companies responding to Tokyo Stock Exchange pressure — has created compelling opportunities in domestically focused businesses previously ignored by global investors. The weak yen and rising wages are structural positives for select consumer and service sectors.

South Korea (approximately 10–15%): South Korea hosts globally competitive semiconductor, battery technology, and shipbuilding companies. The Korean government's "Korea Discount" reduction programme — pushing conglomerates to improve shareholder returns — is slowly unlocking value in previously undervalued listed groups.

ASEAN (approximately 15–20%): Vietnam (manufacturing hub), Indonesia (domestic consumption giant), the Philippines, Thailand, and Singapore collectively offer a diverse opportunity set in consumer, financial, and technology sectors. Vietnam in particular is benefiting from manufacturing reshoring as companies diversify supply chains.

Australia and New Zealand (approximately 5–10%): Selected opportunities in resources, healthcare, and financial services — providing stability and resource exposure within the broader portfolio.

Investment Approach

The fund employs a bottom-up active approach: companies are selected on the basis of business quality, earnings growth potential, and valuation. The team screens for businesses with:

• Dominant or growing market share in structural growth industries
• High returns on capital employed (15%+ ROCE preferred)
• Clean balance sheets with manageable leverage
• Management teams with track records of allocating capital well
• Valuations that offer a margin of safety relative to long-run earnings power

Sector and country weightings emerge from stock selection rather than top-down country allocation.

Currency Considerations

The fund is USD-denominated. Underlying investments are in AUD, JPY, KRW, INR, SGD, THB, IDR, and VND — a highly diversified currency exposure. The USD value of the fund will be influenced by movements in Asian currencies against the dollar. The fund does not systematically hedge currency exposure, as the manager views long-run currency exposure to growing Asian economies as consistent with the investment thesis.

Risk Considerations

Equity market risk: The fund holds listed equities. Market values fluctuate daily, and returns can be negative over short periods. Over rolling five-year periods, Asian equity markets have historically delivered strong returns, but short-term volatility can be very significant.

Country and political risk: ASEAN markets in particular carry political risk. Sudden policy changes, election outcomes, or geopolitical events in any constituent country can cause sharp drawdowns in individual market allocations.

Currency risk: USD investors face currency movements in multiple Asian currencies simultaneously. A broad US dollar strengthening environment would reduce USD-translated returns from Asian equities.

Liquidity risk: Smaller-cap holdings in frontier ASEAN markets can be less liquid than major-market large-caps. In a market stress scenario, exit liquidity may be limited and spreads wide.

Concentration: While the fund is diversified across five to six markets, it does not hold global equities — a sustained period of Asian equity market underperformance versus other global markets would result in relative underperformance.

Suitability

This fund is appropriate for investors with a long investment horizon (minimum five years), the capacity to withstand material short-term volatility, and who specifically wish to add Asian growth equity exposure to their portfolio. It is not appropriate as a core defensive allocation or for investors with capital preservation as a primary objective.

How to Invest

Contact our investment team to receive the fund's KIID, prospectus, and current portfolio factsheet. We will discuss the fund's role within your broader asset allocation framework before recommending it. Minimum investment $100,000.

Important: Capital is at risk. Past performance is not a guarantee of future returns. This is for information purposes only and does not constitute a personal recommendation. Seek independent financial advice before investing. This fund illustrates the type of Asian equity opportunity Global Investments advises on — it is not a live investment offer.