Figure 4

First State Asia Pacific Leaders Fund Performance

FIRST STATE ASIA PACIFIC LEADERS

PRICE

SHARPE RATIO

0.03

SIZE OF FUND

£2,527m

1-YR PERFORMANCE

7.63%

No OF HOLDINGS

43

3-YR PERFORMANCE

53.24%

SET UP DATE

01-Dec-03

5-YR PERFORMANCE

MANAGER START DATE

01-Dec-03

TOTAL EXPENSE RATIO

1.57%*

BETA

0.59

YIELD

1.57

VOLATILITY

4.11

MINIMUM INVESTMENT

£1,000

TRACKING ERROR

3.2

MORE DETAILS

www.firststate.co.uk

Source: Investors Chronicle

Figure 5

First State Asia Pacific Leaders Top 10 Holdings

Holding

Percentage

Newcrest Mining

8.7%

Swire Pacific

5.7%

Brambles

5.6%

Taiwan Semiconductor

5.3%

Hong Kong & China Gas

4.9%

Cheun Kong Holdings

4.8%

Oversea-Chinese Banking Corp

4.2%

Lihir Gold

3.2%

Chunghwa Telecom

3.0%

Woodside Petroleum

2.9%

Source: Investors Chronicle

As shown in the previous figure the top ten holdings of the First State Asia Pacific Fund are those of Newcrest Mining, Swire Pacific, Brambles, Taiwan Semiconductor, Hong Kong & China Gas, Cheung Kong Holdings, Oversea-Chinese Banking Corporation, CSL, Chunghwa Telecom, and Hong Lung Group, with percentage holdings ranging from 9.0 to 2.9% respectively.

VI. Fund not for Risk-Taking Investor Expecting a Quick and Large Return

Grote (2009) states of the First State Asia Pacific Leaders Fund that if one believes that Asia "...is about to enter a thundering bull market again in the short-term, this fund is probably not for you. But if you think Asia is less affected than the rest of the developed world by events of the past 12 months or so, and you believe the region offers potential to return more than the UK, Europe or the U.S. As we emerge from the mess we are in, then the First State Asia Pacific Leaders fund should be on your short list." What the investor will have will not be "stellar returns" however they are much less likely to "see huge losses" and it is concluded that the "steady Eddie" approach of Tulloch should serve the investor well. (Grote, 2009)

VII. First State Asia Pacific Leaders Fund Investment Risks

It is stated in the First State Investors IVCV April 2009 report that the profile of the typical investor are those with diversified portfolios., Risk of investing in the Funds include the need for the investor to be aware "that a short-term returns may not match the potential long-term returns. (2009) General investment risks are stated to include: (1) The investments of the Company are subject to normal market fluctuations and other risks inherent in investing in securities; (2) There can be no assurance that any appreciation in value of investments will occur; (3) The value of investments and the income derived from them may fall as well as rise and investors may not recoup the original amount invested in the Company; (4) There is no assurance that the investment objectives of any Fund will actually be achieved; and (5) It is important to note that past performance is not necessarily a guide to future returns or growth. (First State Investors ICVC, 2009)

Also stated as a Fund risk factor is that of inflation as it may possibly impact the buying power of the investment in the Funds in the future. Credit risk is listed and as well the effect of initial charge is also stated as an investment risks. Suspension of dealing in shares is an investment risk as there are circumstances...

Fluctuations to currency exchange rates is also considered to be an investment risks as these may "affect the value of an investment." (First State Investors ICVC, 2009)
Also noted as an investment risk is risk of the industry or sector "...Where a Fund invests primarily in fast growing economies or limited or specialist sectors, it may be subject to greater risk and above average market volatility than an investment in a broader range of securities covering different economic sectors." (First State Investors ICVC, 2009) Also stated as an investment risk is aggregation of orders as in management of the Funds "...the ACD may combine orders for the Funds with those of other clients. This procedure may operate on some occasions to the disadvantage of the Funds and on others to the advantage of the Funds." (First State Investors ICVC, 2009)

Dilution adjustment is a factor that should be noted by investors in situations where a dilution adjustment might be made on the purchase or redemption of shares. It is additionally stated that derivatives are used for efficient management of portfolios however, "the use of derivative instruments and hedging transactions may or may not achieve their intended objective and involves special risks." (First State Investors ICVC, 2009) Finally, it is stated that liabilities of the company can also negatively impact investment in the Funds.

VIII. Investment Objectives

Investment objectives for First State Asia Pacific Fund are stated to include achieving long-term capital growth. It is related that this fund invests in "...equities in the Asia Pacific region. This fund "will at all times be invested in accordance with its investment policy and therefore at least two thirds of the Fund's total assets will at all times be invested in equities and equity type securities of issuers incorporated in the Asia Pacific region or having a predominant part of their activities in the Asia Pacific region." (First State Investors ICVC, 2009) In fact, all of the Funds of First State Investments are of the nature that focuses on achieving long-term capital growth.

Summary & Conclusion

It has been related in this work that the First State Asia Pacific Leaders Funds are of the nature that focus on long-term capital growth rather than focusing on quick profits which may soon be lost in a volatile market. Furthermore, the First State Asia Pacific Leaders Fund is focused on investments in equities and equity type securities in cases where the issuers have the largest part of the activities in the region of the Asia Pacific. The State Asia Pacific Leaders Fund prefers to invest in such as non-cyclical sectors including those of (1) consumer staples, (2) telecoms and (3) utilities.

References

First Asia Pacific and Leaders Fund (2009) First State Investments. 2009. Online available at: http://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx?user=finex&sedol=3387421&track2=&ext=ut5181&type=packet_fund_class_doc_factsheet_private

First State Asia Pacific Leaders (2009) Trustnet. Online available at: http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=QIF52&univ=U

First State Asia Pacific Leaders Fund Leads the Pack (2009) Investors Chronicle. 2009. Online available at: http://www.investorschronicle.co.uk/InvestmentGuides/Funds/article/20090720/41d5825e-7210-11de-a4d6-0015171400aa/First-State-Asia-Pacific-Leaders-Fund-leads-the-pack.jsp

First State Investments ICVC (2009) Simplified Prospectus 8 Apr 2009. Online available at: http://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx?user=finex&sedol=3387421&track2=&ext=ut5181&type=packet_fund_class_doc_simplified_prospectus

Grote, Daniel (2009) Hold or Fold? First State Asia Pacific Leaders Fund. Citywire. 27 Apr 2009, Online available at: http://www.citywire.co.uk/adviser/-/features/hold-or-fold/content.aspx?ID=338674&Page=1