An interview with Barings ASEAN fund manager

An interview with SooHai Lim Baring ASEAN Frontiers Fund Manager and Investment Director for Asia Pacific Equities

An interview with Barings ASEAN fund manager

SooHai LimChris Menon: How would you characterise the investment style of your ASEAN fund?

SooHai Lim: Growth at a reasonable price (GARP) with a bias towards small and mid-caps.

Chris Menon: Since launch in August 2008 you’ve delivered annualised returns of 8.8% in US dollar terms, putting you in the first quartile of your peer group. Why is that?

SooHai Lim: Three reasons:

 1) The investment universe (ASEAN and frontiers) offers highly attractive asset classes and regions);  

2) Barings’ GARP philosophy and process are highly appropriate for the region given the abundance of  growth;

3) We have a solid team of experienced investors supporting the management of this fund.

 

Chris Menon: Why should anyone wish to invest in your fund as opposed to a pure China or India fund?

SooHai Lim:  All three regions – China, India and ASEAN/frontiers – are highly attractive long term investment regions and each has different attractive attributes. However, the ASEAN Frontiers Fund has a good mix of exposures to various emerging countries including promising frontier markets that have excellent long term upside potential. Also given a wider range of markets to invest in, the ASEAN Frontiers Fund has greater flexibility to tactically move around the countries based on near term economic and political developments.  

 

Chris Menon How many countries are you invested in at the moment?

SooHai Lim: Eight countries, as at the end of August.

 

Chris Menon: Given the breadth of your country coverage, how do you manage to select stocks?

SooHai Lim:  We approach stock selection in three ways. We use quantitative inputs to screen stocks for a number of growth and risk characteristics and we use bottom-up inputs such as fundamental analysis, company meetings and visits and consistent monitoring of stocks through local contacts and news flow. In terms of top down inputs, we consider the views of Barings’ Strategic Policy Group, our macro and asset allocation research team, on global asset class preferences.

 

Chris Menon: What are your key overweights in terms of countries and sectors?

SooHai Lim:  In terms of countries, we are overweight Indonesia, the Philippines and Thailand. We also have smaller off-benchmark positions in Sri Lanka, India and Vietnam. By sector, we are overweight Financials and Consumer Discretionary. [As at end-August]

 

Chris Menon: What is it about these countries and sectors that you find attractive?

SooHai Lim:  These markets offer what we call a ‘demographic sweet spot’, with long term opportunities being driven by the sizable, comparatively young populations and growing middle classes.  This is driving opportunities across a range of sectors such as Financials, Consumer Retail, Infrastructure, Property, Healthcare and Leisure.

 

Chris Menon: How do you attempt to manage the risks inherent in investing?

SooHai Lim:  We manage risks in a number of ways. This includes understanding the political and country risks that our investment companies operate in and being comfortable that those risks are manageable and acceptable from a portfolio level. Importantly, focusing on the quality of the management and franchise of our investment companies is key. We also run various quantitative and risk models to ensure that overall portfolio risks (such as style exposures, portfolio liquidity profile, etc) are kept at an acceptable level.

 

Chris Menon: What criteria do you look for in a potential investment?

SooHai Lim:  Our stock research framework seeks to identify unrecognised growth in companies, their ability to finance growth, their exposure and sensitivity to currency fluctuations, the credibility of their management and lastly, compelling valuations. 

 

Chris Menon: How great an issue is poor corporate governance in some of these markets? How do you attempt to deal with this?

SooHai Lim:  We assess corporate governance at companies and indeed in countries before investing there as part of our investment process. It shouldn’t be forgotten that these are emerging and frontier markets, often at a relatively early stage of development. While there is still room for improvement, we have seen significant progress in recent years, encouraged by bodies such as the OECD, particularly in areas such as financial reporting. With plans to integrate ASEAN capital markets and link stock exchanges by 2015, raising the visibility of good corporate governance practices is a high priority for authorities and companies in the region.

 

Chris Menon: What are the fund charges?

SooHai Lim:  GBP I share class has a  0.75% annual management charge.

 

Chris Menon: Is the fund sold directly to retail investors or only via platforms?

SooHai Lim:  In the UK the fund is available to Intermediaries both direct and through intermediary platforms. It is also available to direct investors via many of the leading direct to consumer platforms.

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Categories: Analysis

About Author

Christopher Menon

Every Investor Editor Chris Menon is a financial journalist who has written regularly for national newspapers, magazines and websites about personal finance, with particular emphasis on investing.