Invesco Asian

Manager William Lam invests primarily in the shares of companies in Asia and Australasia (excluding Japan) in this concentrated, value-orientated fund. He looks for companies where the market is underestimating earnings growth and stocks are chosen with a three-year investment horizon, to give the share price time to appreciate to a level he believes to be fair value.

Please note, Invesco is the new name for Invesco Perpetual effective October 2018.

Our opinion

What we like about Invesco Asian is the very different approach and philosophy manager William Lam takes. The behavioural error of mixing up good businesses with good investments can often lead to trouble, but William's very pragmatic approach and flexible strategy is designed to separate these two elements. This means the portfolio will move around – demonstrating true active management – to areas of the market where he sees the best value. It can lead to exposure where other managers fear to tread, with a value focus that, in the recent past, has been unpopular within the investors.

Fund manager

William Lam has co-managed Invesco Asian since April 2015. He took sole responsibility in 2017. William is a qualified accountant, having previously worked at Deloitte, and also holds an MA from Oxford University and an MSc from York University. He moved into investment management in 2001, taking a role with Orbis Investment Management as their global investment analyst. He subsequently moved across to Invesco in 2006. As part of the company's succession planning, William was made co-head of emerging markets in 2018.

A share price is just the collective view of hundreds of human beings, who can often be unimaginative, over-emotional, and too short-termist.

William LamFund manager

Investment process

The process is designed to differentiate between good companies and good investments – the two are not always the same. William looks for those companies whose share prices are substantially below his estimate of fair value. He does this using two steps. The first is calculating the expected growth in earnings, based on historic growth rates, market trends, a company’s competitive advantage and the quality of their management. This is then combined with the team's view of a fair valuation based on the strength of the balance sheet, cash flow and future growth (in absolute terms and versus the company's own history). This process will narrow the universe down to 50-70 holdings for Invesco Asian, with a short-list of 30 reserve candidates that can be added should valuations allow. The process tends to lead the team to focus on unloved areas of the market, as this is where many undervalued companies can be found.

ESG

ESG - Integrated  

This fund’s ESG considerations are built into the valuation process. However, William does not start by excluding those with poor track records, as he wants to consider all potential stocks before passing judgement. He believes it is important to understand the size and scale of potential ESG issues a firm faces, and whether this will have an impact on the company or its share price. When these are identified, Invesco will engage with companies directly, either through its dedicated in-house ESG team, or directly via the fund manager or analysts, depending on the complexity. All analysts and fund managers systematically integrate ESG into the stock analysis process using an in-house ratings tool. This has implications for the estimation of future earnings for the firm, potential dividends, as well as future valuation potential. Will also looks at firms improving their ESG profiles as a source of returns, meaning the fund may hold names that may seem unappealing from an arm’s length perspective, but are looking to improve their credentials which should feed through to better share price performance as these improvements are recognised by the market.

Risk

Risk analysis is built in throughout the process. When stocks are analysed, their liquidity (ability to buy and sell shares quickly) and downside protection is factored in to any valuation metric. There are further risk controls at the portfolio construction level. Invesco Asian is assessed for any specific country or sector bias and new names will need to diversify away from any bias identified. Invesco Asian is also monitored by a dedicated risk team. There is a 'CIO Challenge' function meaning William can be queried on the risk of any one of his holdings at any point.

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