FSSA Hong Kong Growth I USD Acc |
Morningstar's Take
|07/02/2024by Claire Liang
| Despite its recent underperformance, we believe that FSSA Hong Kong Growth is well equipped to bounce back thanks to a topnotch portfolio manager, a strong investment team, and a time-tested investment approach. We reiterate the strategy’s High People and Process ratings. Lead manager Martin Lau is a Greater China equity veteran. He boasts 28 years of experience and has led this strategy for over two decades. He is an expert investor, demonstrating in-depth investment knowledge and a passion for investing during our meetings over the years. His stellar long-term track records across his managed mandates further attest to his investment capability. Lau leads an investment team of 22 members who average 13 years of investment experience. The team adopts a generalist model in conducting research, encouraging different team members to form their own views on the same company, promoting discussions and open debates. The team was stable in 2023 and restored its resources by adding two experienced hires, who spend around 50% of their time on China equities. Lau applies the teamwide, bottom-up investment approach that aims to identify quality growth companies at reasonable valuations, with particular attention paid to management quality. He invests with an absolute return mindset and defines risk as losing money in real terms rather than short-term benchmark or peer-relative underperformance. The focus on quality and capital preservation has yielded strong downside resilience in the past, such as in 2018, 2021, and 2022. However, it was not the case in 2023’s down market, when the strategy lagged both the Hang Seng Index and its peers. The strategy suffered from Chinese stock picks. During the year, the China equity market favored energy stocks and cheaply valued but lower-quality state-owned enterprises that the team has always avoided. Meanwhile, the team’s long-favored consumer names plummeted on concerns over China’s weak consumer spending. Nonetheless, Lau remained constructive on the longer-term consumer upgrade trend in China and has added to his top convictions, such as China Mengniu Dairy and Anta Sports, amid their stock price weakness. The 2023 mishap did little to dent the strategy’s long-term success. The quality-growth-focused, long-term-oriented investment process has been in place and proven over multiple market cycles, and we maintain our conviction in Lau’s investment savvy and execution. |
Our confidence in this strategy remains. To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | High |
| Parent | Average |
| Process | High |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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