When Matthew Dobbs, head of global and international small cap equities at Schroders, first moved to Singapore, he confesses that he barely knew where the city-state was on a map. However, he says it was evident straight away that the area had plenty of investment opportunities.
“I got to Singapore and I thought, ‘this is a region that is going somewhere’,” he says. “Everything is progressive: the structure, the work ethic, the governance, and the scope and scale of growth.
“I felt like all of this would offer opportunities for public market investment, which would grow and continue over time.”
It seems his growth investment thesis – which he used when creating his AsiaPacific Fund – was correct, with the region nearly consistently seeing yearly growth of about 2-3% higher than the rest of the world during the past two decades, even in the periods of poor markets that he recalls from 1997 and 1998.
Dobbs began his career at Schroders in 1981 as an investment analyst looking at UK sectors.
After two years in this position, he moved to New York, before moving to Singapore to work as head of investment during one of the area’s big recessions.
After leaving the market in a much healthier state, Dobbs returned to the UK with his experience of Asia in 1987, where he regularly travelled to Japan and aided Koreans with investments into overseas markets, alongside a growing portfolio of responsibility.
After taking leadership of the Schroder AsiaPacific Fund in 1995, he moved back to Singapore in 1996, running both the company’s Asian and London-based operations.
Fast forward to today, and Dobbs continues to manage the Asia-Pacific Fund alongside a variety of other Asian offerings, including the Schroder Asian Alpha Plus Acc Fund, in his current role as head of global and international small cap equities, once again based in London.
Growth model
For Dobbs, difficulties in Asia in recent years have come from the inability and unwillingness of companies listed in the region to translate strong revenue and economic growth into shareholder returns.
“Lots of people say there are problems with corporate governance in Asia – and there is – but my job is to serve my investors well,” he says.
“The fact that some companies are poor in this respect is obviously bad, but it is also an important differentiator of where we should invest. Growth and resilience are key, but you have to fund the right stocks that are going to translate into cashflows.”
The £610m Schroder Asian Alpha Plus Acc Fund, for example, aims to maximise capital growth through investments in securities of the Asia region, and has an emphasis on fixed-interest securities and real estate investment trusts.
The fund launched in November 2007, and has returned 1% in the past three months, 2.8% in the past six months and 29.5% over the past three years.
It has a minimum investment of £1,000 and is most heavily invested in Hong Kong equities (23.88%), Chinese equities (21.57%) and Indian equities (11.53%), across the IT, financials and consumer discretionary sectors.
Although his products are usually aligned with benchmarks, such as the Schroder AsiaPacific Fund, which looks to achieve growth in excess of the MSCI All Countries Asia excluding Japan index over the long term, the manager does not allow himself to be completely limited by such restrictions.
“With the AsiaPacific fund, the main focus is not only on the so-called ‘Pacific route countries’, but is also on India, and we even invest a little into Australia and New Zealand. We do not see this benchmark as limiting where we can invest, and one of our strengths is our research team on the ground – internal due diligence.”
