GAM Asia Focus Equity

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GAM Asia Focus Equity seeks long-term capital growth through active investment in a concentrated portfolio of approximately 50 companies across Asia ex-Japan equity markets. Led by Jian Shi Cortesi, GAM’s Asia Focus Equity team invests in Asia’s leading industries driven by key trends, with core themes focused on consumer and innovation. The team seeks to generate alpha from stock selection, sector allocation and country allocation, with large caps and low-beta stocks added when stock valuations are less attractive, in a bid to protect on the downside.

Active Thinking Video

Jian Shi Cortesi notes that weak sentiment in China is keeping Chinese equities at very low valuations, due to the soft economic growth, real estate drag and the ongoing China-US rivalry. However, she is optimistic about long-term prospects, with the conviction that in the long term earnings growth will drive stock prices.

We continue to see many of our portfolio companies delivering good earnings results. Some of these have been so far ignored by the markets and are not yet reflected in the price, but we have also seen some stocks react positively to the earnings growth.

Our Edge

DEEP ASIA EXPERIENCE

Jian Shi Cortesi has deep understanding of the Asian economy, companies, consumers and financial markets, supported by valuable insights from a large network of local contacts.

STRONG PERFORMANCE

The three-pillar investment approach has generated some of the best and most consistent performance in the Asia universe, with the fund generating circa 50% outperformance over the index and ETFs since November 2013.

Three sources of alpha generation

Stock picking enables the team to invest in attractively-valued companies with high upside potential, sector allocation focuses on key trends while top-down country allocation allows exposure to the most attractive countries in the region.

Highly active

The concentrated portfolio of circa 50 holdings is significantly different from the index, with an active share of typically 60-90%.

investment team

GAM Asia Focus Equity is managed by Jian Shi Cortesi, Investment Director. Jian has been a fund manager of Asia / China equity at GAM since 2010 and has 19 years’ professional experience in China, the United States and Switzerland, including 17 years in the investment industry. Jian is supported on the fund by Fanwei Zeng, Investment Analyst.

Jian is part of GAM’s Global Equity team, which comprises eight investors averaging 22 years of investment experience. The Global Equity team is led by experienced investor, Mark Hawtin, who has 37 years’ investment experience as a fund manager and has demonstrated long-standing, differentiated performance in the global equity space. The wealth of expertise across the team provides a broad forum to exchange expertise, knowledge and alpha maximisation across multiple portfolios. The team currently manages approximately USD 2.5 billion of assets.

The Global Equity team is part of GAM’s broader Equity team, which meets regularly to discuss ideas and portfolios and manages in excess of USD 7.5 billion in fundamental equity.

As the fund’s manager, Jian is ultimately responsible for research, portfolio management and trading decisions, and the first line of portfolio risk management. Two additional layers of independent risk oversight are performed by GAM’s risk teams.

Consumer behaviours will permanently change following Covid-19… adopting online healthcare, online education and working from home. The portfolio is positioned in all these growth areas.

Jian Shi Cortesi

Investment Director

Fanwei Zeng

Investment Analyst

Philosophy and Process

Investment Philosophy

The team believes that alpha generation can be achieved by focusing on leading industries, which are driven by powerful, long-term trends. In particular, the investment approach focuses on consumer and innovation, and the team typically invests in companies in consumer, technology, healthcare and financial services. The team believes that in a low-yield, low-growth environment, technology and consumer offer the best growth prospects and the fund should thrive in such an environment.

Process

The process blends top-down analysis with bottom-up stock selection, within a closely monitored risk-controlled framework. The team starts with country allocation across emerging markets and Asia-ex Japan countries. A combination of qualitative assessments and quantitative models produce a set of results ranked into single scores, which are used to determine the overweight or underweight for each country. In the next step of the process, the team conducts stock screening on a universe of circa 1,000 securities. The resulting few hundred companies are subject to fundamental analysis, company visits and valuation modelling, and from these ‘winning’ stocks are selected across various styles and patterns (value, turnaround, growth and quality). The team assigns stock weightings based on conviction and risk considerations and in countries where stocks selected do not meet the target weights, the team will add in large caps and low-beta stocks to meet the relevant targets. This balanced portfolio construction seeks to capture short-term cyclical recovery, as well as long-term growth. Ongoing risk-monitoring of the portfolio focuses on downside protection, liquidity risk, factor exposure, volatility and scenario analysis. The team actively adjusts the portfolio when risk parameters exceed acceptable levels.

Country weight allocation

Proprietary models combine valuation, momentum and profitability
Results allow for absolute and relative attractiveness of countries

Stock selection

Fundamental analysis, industry research and management meetings
In-depth company analysis is used for valuation modelling

Portfolio Construction

Each stock typically sized between 1-2%, a few high-conviction stocks >2%
Balanced market cap exposure; highly scalable portfolio

Risk Management

Independent risk monitoring performed by investment risk analysis teams
ESG factors are considered to understand companies’ risk-return profiles

Reasons to Invest

Strong growth in a low-growth world

Post Covid-19, we believe that the world is likely to return to a low-growth environment and Asia should offer the best growth prospect against this macro backdrop.

Driven by consumer and tech

Asia is a powerhouse for consumption and technology, with many leading companies as well as emerging companies. It offers ample hunting ground for new ‘rising star’ companies in these sectors.

Under-owned market

Asia is an under-owned market, considering its increasing economic importance, and will benefit as investors increase exposure.

Key Risks

Liquidity Risk

Some investments can be difficult to sell quickly which may affect the value of the Fund and, in extreme market conditions, its ability to meet redemption requests.

Currency Risk - Non Base Currency Share Class

Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.

Market Risk / Emerging Markets

Emerging markets will generally be subject to greater political, market, counterparty and operational risks.

Single Country Risk

Investment in companies of a single country may be subject to greater political, social, economic and tax risks and may be more volatile than investments in more broadly diversified funds. Local tax law may change retrospectively and without notice.

Special Country Risk / China

Changes in China's political, social or economic policies may significantly affect the value of the Fund's investments. China's tax law is also applied under policies that may change without notice and with retrospective effect.

Equity

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

Onshore Renminbi Currency Risk

Currency control decisions made by the Chinese government could affect the value of the Fund's investments and could cause the fund to defer or suspend redemptions of its shares.

Shanghai-Hong Kong Stock Connect / Shenzhen Connect Risk

The Fund may be investing in China A Shares via the Shanghai – Hong Kong Stock Connect / Shenzhen Connect which may entail additional clearing and settlement, regulatory, operational and counterparty risks.

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

OuR Thinking

Active Thinking

10 min read

Active Thinking: China’s economic evolution beyond stereotypes

20 February 2024

Jian Shi Cortesi, Investment Director, Asia/China Growth Equities, delves into the intricate dynamics of Chinese and Asian equities. She focuses on the impact of manufacturing shifts, India’s emergence and the potential parallels with Japan’s economic trajectory.

Active Thinking

13 min read

Active Thinking: The Great Call of China

12 December 2023

China is not without its problems, but, given the sheer scale of opportunities, warrants far more than peripheral market status for equity investors, argues Jian Shi Cortesi. She believes investors should look through the lingering anti-China haze and instead focus on the powerful longer-term growth story.

Outlook 2024

7 min read

Outlook 2024: Jian Shi Cortesi (Asia/China Growth Equities)

December 2023

Asia & China Growth Equities – An exciting market with mispriced opportunities

Our Thinking

Fund Information

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GAM Multistock – GAM Asia Focus Equity is a subfund of GAM Multistock, registered office at 25, Grand-Rue, L-1661, Luxembourg.

Disclaimer: Past performance is not an indicator of future performance and current or future trends. The indications could be based on figures denominated in a currency that may be different from the currency of your residence country and therefore the return may increase or decrease as a result of currency fluctuations. Capital at risk: all financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Any reference to a security is not a recommendation to buy or sell that security.