GUINNESS Flight Asia takes this year's Fund Manager of the Year Award in the three-year Asean equities category with its Guinness Flight Asean Fund. The Asean Fund, launched in November 1990, returned 131.93 per cent in the five years to February 17 in US dollar terms, 16.39 per cent over the three years and negative 1.77 per cent over the one year. Its annualised growth rate in US dollars as at February 3 was 18.98 per cent since launch. The fund had US$46.4 million in it as at February, according to the company. Lynda Johnstone, a director of Guinness Flight Global Asset Management and manager of the Asean Fund, said it was managed with the top-down approach, whereby country selection within the five Asean nations was the dominant part of the investment process. Countries could be over or under-weighted to a maximum of 50 per cent of their neutral market capitalisation weightings. For example, Malaysia, with a neutral weighting of about 40 per cent in Asean, could make up between 20 per cent and 60 per cent of the fund, depending on the manager's view. As at February 24, the Asean Fund was overweight Malaysia and neutral as to Singapore, with 48 per cent and 28 per cent invested in the two markets respectively. Thailand was under-weighted at 6 per cent of assets compared with a neutral weighting of about 12 per cent. Ms Johnstone said: 'We were overweight Malaysia all last year which benefited the fund's performance but, going forward, we are likely to trim our overweight position. A lot of the economic turnaround is already factored into equities and there is no room for disappointment.' She said problems in the banking and property sectors continued to hang over the prospects of the Thai market. 'It is difficult to feel comfortable with any sector in Thailand. Obviously, at some point this year, we could see a turnaround in the current account and the market would show some strength but I don't believe it is sustainable until we get a clearer picture of earnings growth and the economy.' As a Guernsey offshore fund, the Asean Fund cannot invest more than 10 per cent of its assets in markets not authorised by Guernsey, which include the Asean nations of the Philippines and Indonesia. A neutral combined Asean weighting in the two markets would be over 20 per cent, based on market capitalisation. Philippines-listed Global Depositary Receipts is not included in this restriction which explains how the Guinness Flight Asean Fund's combined holding in the two markets is 13 per cent, well above the 10 per cent limit. The Asean Fund's major individual holdings as at February 24 included Maybank, OCBC in Singapore and United Engineers in Malaysia. The fund's asset allocation has changed markedly since the middle of last year, mainly by a downward adjustment of the Thai component. The old asset allocation numbers were Malaysia (39 per cent of fund assets), Singapore (27 per cent), Thailand (19 per cent), the Philippines (9 per cent) and Indonesia (3 per cent).