Thu, 29/05/2014 - 11:38
T Rowe Price has launched the Asia Opportunities Fund, which complements the firm's 23-year-old, USD3.8 billion New Asia Fund.
The firm expects investor demand for Asian stocks to continue rising over the next several years as the region's economic importance grows.
The Asia Opportunities Fund will seek long-term capital appreciation by owning high-quality, well-managed companies that are doing business throughout Asia (excluding Japan) and that it believes can reliably grow over the long term.
Unlike the New Asia Fund, which focuses on earnings growth, the new fund will focus on companies with highly predictable earnings.
Eric Moffett, who has 13 years of investment experience and has been at T. Rowe Price for six years, will manage the fund. Moffett was previously T. Rowe Price's associate director of equity research for Asia ex-Japan, where he mentored research analysts and also served as one.
The fund will invest in 40 to 70 high-quality companies in Asia.
The fund is supported by a locally based team of 14 equity analysts in the firm's Hong Kong and Singapore offices, as well as the firm's broader global research platform that can bring additional insights.
In selecting investments, Moffett generally seeks companies with one or more of the following characteristics:
◦ Management with a proven track record of delivering results and high corporate governance standards
◦ Clear competitive advantages
◦ High returns
◦ Strong balance sheet
◦ Reliable earnings growth
◦ Strong free cash flow
◦ Cash return to shareholders through dividends or buybacks
◦ Buy and hold potential
The net expense ratio is estimated to be 1.15 per cent for Investor Class shares and 1.25 per cent for Advisor Class shares.
Moffett says: "As Asia moves into a slower-growth environment, it is increasingly important that companies generate returns above their cost of capital. The quality of companies in Asia is gradually improving, as is their ability to effectively allocate capital. But many investors in Asian stocks are short-term focused. As they look for stocks that could double next month, they frequently overlook companies that can steadily compound over time. And that's where we want to focus.
"It's true that Asian markets face near-term challenges as they grow and develop. Yet growth rates in the region are still high by global standards, and today many stocks across the region are already priced for a sharp slowdown. There's often little differentiation between low-quality companies and the companies that can endure and take market share during difficult market environments. The Asia Opportunities Fund seeks to invest in these companies, where we believe durable businesses present long-term opportunities and can consistently grow through various economic cycles."
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