Fund manager Cho-Yu Kooi, based in our Singapore office, shares the same investment philosophy and approach as Samir Mehta, manager of the all-cap JOHCM Asia ex Japan Fund, both fund managers having worked alongside one another for many years prior to joining JOHCM in 2011. She employs a fundamental-based, predominantly bottom-up investment approach. She focuses on Asian companies with quality, sustainable, long-term growth hallmarks. These are businesses that can grow over economic and liquidity cycles and which generate high returns on the financial capital that they employ.The Fund generally consists of stocks with a market capitalisation of less than US$4 billion while close attention is paid to liquidity.
Investment Strategy
The team’s investment philosophy is based on the following beliefs:
- There are pricing inefficiencies in Asian stock markets, the greatest of which are at the individual stock level. This is, therefore, where Cho Yu focuses her investment resources, with approximately 70% of total value added expected to come from fundamental stock selection
- Value creation in a company is driven by long-term growth and the ability to generate returns above its cost of capital. They, therefore, focus on companies displaying long-term sustainable quality growth characteristics
- 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.
Reasons To Invest
- The team has long experience of investing in smaller Asian companies. Both fund managers have approximately 20 years investment experience working in Asia and have spent nearly half of their investment careers working together
- Most of the team’s past performance has come from stock selection across a wide range of market capitalisations. They are benchmark agnostic and many of their positions are in off the beaten track names that are not widely owned by our competitors. Within a programme of Asian / Emerging Markets managers, the team’s Asian small cap portfolio should therefore contribute diversification benefits to clients
- The team has decided to limit capacity in the small and mid-cap strategy to US$1bn, and to focus on broad regional mandates (with or without Australia). Capping the level of assets enables them to access attractive investment opportunities and to preserve the consistency of their style for their clients. Avoiding asset gathering behaviour ensures that they can grow with our clients and not at their expense
- The team has a proven ability to generate outperformance in both rising and falling markets. With the region’s history of positive but volatile returns, this is essential to delivering consistent outperformance to investors
- Turnover in the strategy is low and the team conducts thorough due diligence before making a buy decision. This means that they avoid costly and unnecessary trading which will help enhance returns to clients
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Cho-Yu Kooi
Senior Fund Manager
