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The Asia Income process

Mark Williams, Carolyn Chan & Shashank Savla

Investment philosophy

The investment process is based on the belief that the dominant influences on Asian equities will vary as cycles and environments change. The approach is also shaped by the fund managers’ view that the region will generate long-term growth and companies are increasingly paying dividends back to shareholders.

While expectations will alter as events unfold across Asia, the end aim of the investment process remains constant. The process seeks to identify companies that will benefit from the growth in the region, have an attractive yield and give a greater chance of expectations being beaten. The process aims to avoid those stocks that are likelier to miss expectations. The process is also designed to enable the fund managers to compare companies on a like-for-like basis across countries and sectors.

By targeting at least 1.1 times the dividend yield of the region across the portfolio, the fund managers believe this will ensure the equities they invest in are amongst the more conservative, better managed companies. They do not see the additional yield criteria as leading to low relative returns, as long as it is combined with growth and attractive valuations.

To filter the potential universe of stocks and to enable the fund managers to focus resources and time on the areas of the Asia Pacific ex-Japan market that they believe will generate the greatest returns, the fund managers identify what are likely to be the key drivers of equities in the region over the following six to 12 months. They then determine the impact and the winners and losers of these drivers before selecting companies based on yield, earnings growth and cheap valuations.


Investment process

There are four stages to the investment process:

  1. 1

    Identify the key drivers for Asia Pacific (ex-Japan) equities

  2. 2

    Create a framework that captures the likely effects of these drivers, both positive and negative

  3. 3

    Analyse individual companies that will benefit from these drivers, looking for those stocks which have relatively high dividend yields backed by strong free cash flows, earnings growth and cheap valuations on an appropriate metric (beyond yield alone)

  4. 4

    Construct the portfolio, diversifying across drivers, countries, sectors and stocks

The investment process is iterative in that the information gleaned from company management and analysis is as important in helping to determine the drivers as it is in stock selection.


Process document

Further information can be found in the Liontrust Asia Income Process document.

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Liontrust Asia team
Mark Williams, Carolyn Chan & Shashank Savla
The Asia team

Mark Williams, Carolyn Chan and assistant fund manager Shashank Savla have 60 years of combined investment experience in analysing Asian companies. Mark managed funds formerly at F&C and Occam and Carolyn worked previously at Hampton Investment Management.

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Latest fund updates

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Read the latest fund updates from the Asia team.


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Ratings

FE Crown Rated - 4
Liontrust Asia Income Fund
FE Crown Rating: 4
Morningstar rated 4 star
Liontrust Asia Income Fund
Morningstar Rating: 4

Disclaimer:
• Past performance is not a guide to future performance. • Do remember that the value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.  • Investment in Funds managed by the Asia Team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. • The Funds' expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. 

• The information and opinions provided should not be construed as advice for investment in any product or security mentioned.  • Always research your own investments and consult with a regulated investment adviser before investing.


© 2017 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.  Past performance is no guarantee of future results.

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