Asian Equity Income - January 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. Past performance does not predict future returns.
In 2024 the Guinness Asian Equity Income Fund produced a total return of 14.9% (Class Y in GBP), compared to the benchmark, the MSCI AC Pacific ex Japan Net Total Return Index, which rose 12.1%. The Fund therefore outperformed the benchmark by 2.8%. Further performance data is shown below.
China’s domestic economy, consumer demand and the continued strength in capital spending associated with the Artificial Intelligence (AI) theme were the macro factors that dominated companies’ operating performance in 2024. Valuations were affected by the changed outlook for, and subsequent cuts to, US interest rates. China’s policy shift in September caused a sharp rally in Chinese share prices, although actual stimulus has been slow in coming. Finally, the election of Donald Trump in November injected uncertainty given his willingness to employ trade tariffs.
Stock market returns were dominated by the S&P 500, but Asia still had a decent year led by Taiwan, Singapore, Malaysia and China. India performed in line with the benchmark while Australia and Hong Kong were notably weaker. Korea was by far the weakest market.
In the Fund, outperformance in 2024 was attributable to our Banks, Insurers and Technology companies, specifically those related to the AI theme. The underweight to TSMC was offset by strength in other technology holdings and by the zero exposure to Samsung. Performance detractors came from the Communication Services, Consumer Discretionary, Healthcare and Real Estate positions.
We expect US policy, both foreign and domestic, to introduce greater volatility to equity markets. The operating environment will become more uncertain especially with respect to global trade. US dollar interest rates will also be an important factor, primarily affecting valuations. The downward trajectory appears to be elongated as core inflation remains stickier, even if the Federal Reserve Open Market Committee (FOMC) were to place greater emphasis on a different, market-based assessment of inflation.
China’s domestic economic path also remains an important variable. Policy changes were announced in response, we think, to the increased likelihood that without it the 2024 economic growth target might not be achieved. Policy changes have happened and consumer-supportive moves like the popular trade-in programme have been extended; but the overall approach has been measured, and confidence remains fragile.
The portfolio’s average annual earnings growth over the 2024-26 period is forecast to be a reasonable 6.2%. This is in line with Fund’s long term (10-year) average annual earnings growth rate. It compares to 13.5% for the benchmark. The Fund’s 2024 price/earnings (P/E FY) ratio of 10.9x values it at a 19% discount to the market’s 13.5x.
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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.
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 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: investorservices@linkgroup.co.uk
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.