Awards reaffirm pedigree of services veteran
JF believes that a disciplined, team-based approach, where managers do not compete with each other, leads to consistent outperformance
JF ASSET MANAGEMENT chalked up top performances in two major sectors, reaffirming its status as an Asian powerhouse.
The JF SAR Japan Fund (Class A), which has risen by 55.2 per cent since 2001, against a 43 per cent increase for the FTSE World Japan Index, was the best performing Japan equity fund over a three-year span. The JF Korea Fund was the best performing South Korea equity fund over the same three-year period.
It has risen by 94 per cent since 2001, against a 64 per cent increase for the Korea Composite Stock Price Index.
The two awards reaffirm the pedigree of one of the first international financial services groups to set up shop in Asia.
When it was still named Jardine Fleming, the company offered Hong Kong investors their first opportunity to invest overseas with the launch of its Japan yen trust in 1969, head of investor services Geoff Lewis said.
The company now has more than 50 funds and about US$57 billion in assets under management in Japan and the rest of Asia.
How has the company stayed ahead of the pack in various competitions over the past three decades?
'We believe in having a strong presence on the ground,' Mr Lewis said, citing the placement of fund management and research teams in Japan, Taiwan, Australia, Singapore, Thailand and Hong Kong, its headquarters.
Recently, JF expanded its footprint to the mainland through China International Fund Management, a joint venture with Shanghai International Trust and Investment Corp (Sitico).
Mr Lewis said continuity in key staff had built sustained outperformance and JF's corporate culture encouraged communication and idea sharing.
'It's a consistent, disciplined, team-based approach. And you'd be surprised how long people stay with us...That's because they are given responsibility fairly early on and they do very much feel part of a team.
'Our investment managers get a lot of support from each other. And we think that is a better approach to getting good long-term performance than, say, having each fund manager being in direct competition with the person sitting next to him - that's not our model.'
Like any good fund management house that emphasises a bottom-up investment approach, JF's fund managers also put in a lot of legwork.
According to JF, its investment managers carry out about 3,200 visits a year.
Last year, JF was fairly positive about the Japan equity market.
'There were some profits from strong exports growth to China for capital goods of all kinds, and also the component suppliers within Japan,' Mr Lewis said.
'We were keen on the global car sector theme and we could see a good chance that Japanese carmakers would carry on taking global market share. We also liked areas such as shipping and trading firms that were likely to benefit from the huge increase in trade between Japan and China.'
He said the bullish stance on Japanese banks also aided their outperformance. South Korea was regarded as a stock picker's market because the macro picture was quite cloudy.
Mr Lewis said: 'There was basically a dichotomy between a strong external sector where Korean exports grew very strongly...and a rather weak domestic economy, where consumption spending was being held back in the aftermath of the consumer credit binge.
'So it was a situation where there were no strong macro themes and we really had to rely on bottom-up stock picking. And that's where David Choi, our Korean fund manager, has excelled.'
This year, JF remains positive about the Japan market. Mr Lewis said some weak fourth-quarter economic data was expected, but there should be a pickup by mid-year, thanks to stronger external demand from China and the US.
'Additionally, we're looking at record free cash flow being generated across the whole of Japan Inc, and that means Japanese companies will have money to plough into capital expenditure, and mergers and acquisitions.'
For the Korean market, JF has a mixed outlook and will continue to seek stocks that offer high yields.