Fund of the week: a cautious approach to Asia

For anyone who had their money tied up in Asian equities back in 1997, this week marks a very unhappy anniversary. The collapse of the Thai currency, the tenth anniversary of which was on Monday, caused "a crisis in the region's stockmarkets", as Faith Archer put it in The Daily Telegraph. But on average, southeast Asian markets "have now more than recouped their losses" and are now 87% above the pre-crisis levels of June 1997, according to the Halifax.

But with investors wary on the outlook for booming China, several financial advisers have suggested the First State Asia Pacific Leaders fund, which has been run by Angus Tulloch since launching in 2003, as a well-diversified way to invest in the region. Buying large and mid-cap Asia Pacific equities with a market cap of at least $1bn, the fund has returned 120% in the past three years. It's more conservatively run than many of its peers, meaning that "volatility tends to be lower", says Justin Modray of Bestinvest. This does mean "it can lag behind in performance terms when strong momentum is driving the market", says Paul Ilott in The Daily Telegraph. "But the fund's focus on companies for their longer-term potential, rather than speculating on shorter-term gains, has still been very rewarding, and possibly less stressful for investors in recent years when compared with some of the alternatives."

For example, earlier this year, when the Chinese stockmarket dropped 6%, First State Asia Pacific Leaders fell back only 1%. "If global markets continue to be volatile, Tulloch's relatively conservative approach and years of experience could also prove valuable in the shorter-term," says Citywire.

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First State Asia Pacific Leaders top ten holdings

Name of holding, % of assets

Hong Kong & China Gas Co, 4.4%

Newcrest Mining, 4.3%

Cheung Kong Holdings, 4.0%

Oversea-China Banking Corp, 3.9%

IOI Corp, 3.8%

China Resources Enterprise, 3.7%

Toll Holdings Ltd, 3.7%

Hang Lung Group, 3.5%

China Telecom Corp, 3.3%

Brambles Industries, 3.1%