Asian Equity Income - August Commentary
Edmund Harriss Director, Chief Investment Officer, Portfolio Manager
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Mark Hammonds Portfolio Manager, Asian & Emerging Markets
This is a marketing communication. Please refer to the prospectus, supplement and KID/KIID for the Funds before making any final investment decisions. The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.
Past performance does not predict future returns.
n July, the Guinness Asian Equity Income Fund rose 4.9% (Y share class, in GBP), underperforming the MSCI AC Asia Pacific ex Japan benchmark which rose 5.8%. Year-to-date, the Fund rose 10.2% slightly lagging the MSCI AC Asia Pacific ex Japan benchmark which rose 10.3%.
Fund performance in July was held back by stock selection. The Fund is underweight to Taiwan Semiconductor Manufacturing Company (TSMC), which detracted from relative performance. However, we also saw weak performance from Qualcomm, Tech Mahindra and Novatek Microelectronics. In Health Care, our drag in stock selection was less about what we hold (both China Medical Systems and Sonic Health Care saw increases in Total Return), and more about what we didn’t hold, with many Chinese Health Care companies seeing a rise in total return performance on the back of improving sentiment in the domestic health care space.
Over the past month, we started to see trade deals finalised between the US and several other countries, starting with Vietnam, where tariffs dropped from the 46% threatened on Liberation Day to 20%. Following that, we saw the US make deals with Japan and the EU, as well as a truce extension with China (the current deadline for the ongoing US-China negotiations is August 12th). Whilst many of the incoming tariffs are lower than the Liberation Day tariff proposals, it has led to a sharp increase of US tariffs, up from the pre-Trump average of 2.4% to 18.3%, the highest it has been since 1934.
Whilst new tariffs have been announced and are broadly lower than the ones announced on Liberation Day, the matter is far from settled. The new tariffs are still far higher than the average seen prior to Trump’s second term and will negatively impact sales volumes and/or margins. On top of this, we have yet to see a finalised deal between the US and China, as well as rising risks of further tariff adjustments with India as a response to India’s continued purchase of Russian oil.
We have written about the importance of intraregional trade in previous notes and how we believe that the rising value of intraregional trade within Asia should help to provide a cushioning effect to outside noise, tariffs included. We continue to hold this belief. The domestic and intraregional stories will help to drive the next leg of growth in Asia, whether that is the nascent domestic growth story in India, broadening trade relations between China and key ASEAN partners, or indeed the evolving landscape that is the Chinese economy. We continue to look for quality businesses in what we see as a time and region full of opportunity.
In this commentary, we consider the market reaction to recent market events, the main drivers of the Fund’s performance, and the leaders and laggards of the fund.
Past performance does not predict future returns
Fund launch: 19/12/2013
Source: FE fundinfo. Net of fees. Investors should note that fees and expenses are charged to the capital of the Fund. This reduces the return on your investment by an amount equivalent to the Ongoing Charges Figure (OCF). The OCF for the calendar year 2024 for the share class used for the fund performance returns was 0.89%. Returns for share classes with a different OCF will vary accordingly. Transaction costs also apply and are incurred when a fund buys or sells holdings. The performance returns do not reflect any initial charge; any such charge will also reduce the return.
The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.
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The information provided on this page is for informational purposes only. While we believe it to be reliable, it may be inaccurate or incomplete. Any opinions stated are honestly held at the time of publication, but are not guaranteed and should therefore not be relied upon. This content should not be relied upon as financial advice or a recommendation to invest in the Funds or to buy or sell individual securities, nor does it constitute an offer for sale. Full details on Ongoing Charges Figures (OCFs) for all share classes are available here.
The Funds are designed to provide investors with exposure to high quality dividend-paying companies in the Asia Pacific region. The Funds are managed for income and capital growth and invest in profitable companies that have generated persistently high return on capital over the last decade, and that are well placed to pay a sustainable dividend into the future. The Funds are actively managed. The Guinness Asian Equity Income Fund uses the MSCI AC Pacific ex Japan Index as a comparator benchmark only. The WS Guinness Asian Equity Income Fund uses the MSCI AC Asia Pacific ex Japan Index as a comparator benchmark only.
For the avoidance of doubt, if you decide to invest, you will be buying units/shares in the Fund and will not be investing directly in the underlying assets of the Fund
Guinness Asian Equity Income Fund
Documentation
The documentation needed to make an investment, including the Prospectus, Supplement, the Key Information Document (KID) / Key Investor Information Document (KIID) and the Application Form, is available from the website www.guinnessgi.com , or free of charge from:
- the Manager: Waystone Management Company (IE) Limited, 2nd Floor 35 Shelbourne Road, Ballsbridge, Dublin DO4 A4E0; or,
- the Promoter and Investment Manager: Guinness Asset Management Ltd, 18 Smith Square, London SW1P 3HZ
Waystone IE is a company incorporated under the laws of Ireland having its registered office at 35 Shelbourne Rd, Ballsbridge, Dublin, D04 A4E0 Ireland, which is authorised by the Central Bank of Ireland, has appointed Guinness Asset Management Ltd as Investment Manager to this fund, and as Manager has the right to terminate the arrangements made for the marketing of funds in accordance with the UCITS Directive.
Investor Rights
A summary of investor rights in English, including collective redress mechanisms, is available here: https://www.waystone.com/waystone-policies/
Residency
In countries where the Fund is not registered for sale or in any other circumstances where distribution is not authorised or is unlawful, the Fund should not be distributed to resident Retail Clients. NOTE: THIS INVESTMENT IS NOT FOR SALE TO U.S. PERSONS.
Structure & Regulation
The Fund is a sub-fund of Guinness Asset Management Funds PLC, an open-ended umbrella-type investment company, incorporated in Ireland and authorised and supervised by the Central Bank of Ireland, which operates under EU legislation. The Fund has been approved by the Financial Conduct Authority for sale in the UK.
If you are in any doubt about the suitability of investing in these Funds, please consult your investment or other professional adviser.
WS Guinness Asian Equity Income Fund
Documentation
The documentation needed to make an investment, including the Prospectus, Supplement, the Key Investor Information Document (KIID) and the Application Form, is available in English from https://www.waystone.com/our-funds/waystone-fund-services-uk-limited/ or free of charge from:-
Waystone Management (UK) Limited, PO Box 389, Darlington DL1 9UF
E-Mail: wtas-investorservices@waystone.com
Waystone Fund Services (UK) Limited is authorised and regulated by the Financial Conduct Authority.
Residency
In countries where the Fund is not registered for sale or in any other circumstances where its distribution is not authorised or is unlawful, the Fund should not be distributed to resident Retail Clients.
Structure & regulation
The Fund is a sub-fund of WS Guinness Investment Funds, an investment company with variable capital incorporated with limited liability and registered by the Financial Conduct Authority.