- From an analysis of 112 Asian equity funds, only 18 funds (16.1%) outperformed their sector peers, earning a top 4 or 5-star rating.
- 67.9% of the funds analysed consistently underperformed and received poor 1 or 2 star performance rating.
- The Jupiter Asian Income fund has consistently been the top performing fund in the IA Asia Pacific ex-Japan sector with returns of 23.36%, 40.03%, and 60.73% over the past 1, 3 & 5 years in the IA Asia Pacific ex-Japan sector.
Since the COVID-19 pandemic began in early 2020, Asian equities have endured several downturns. However, over the past 18 months they have demonstrated encouraging signs of recovery, driven by robust growth in resilient sectors such as technology and consumer goods. This momentum has reinforced Asia’s appeal among investors, particularly those with a higher risk tolerance, who see Asian markets as increasingly integral to a diversified portfolio.
In this article, we identify 10 top-performing Asian equity funds that have consistently outperformed their peers over the past 1, 3, and 5 years. We also provide a full report on the performance of all 112 funds in the IA Asia Pacific ex Japan sector, and assess why analysts believe the region is now one of the most favoured to deliver growth for investors.
Asian Equity Funds Performance Summary
The Asian equity market provides a wide array of investment options across both developed and emerging regions, with funds using various strategies to capture returns.
We analysed 112 Asian equity funds to assess their performance and effectiveness against their peers, over the past 1, 3 & 5 year periods.
Our findings reveal that only 18 of the 112 funds achieved top performing 4 or 5-star ratings, reflecting their strength in delivering above-average returns consistently in comparison to their peers.
Conversely, a large portion of funds underperformed relative to their peers. 32 funds earned a 1-star rating, and 44 funds were rated 2 stars, underscoring the variability and volatility inherent in the Asian equity market.
This performance breakdown highlights the importance of careful fund selection within the Asian equity sector. Given the mixed ratings and varied results, investors should be diligent in choosing funds that align with their risk tolerance and long-term growth objectives.
Best Asian Equity Funds
The 10 funds below have been selected from the best performing Asian Equity funds that have received a 4 or 5 star rating for their 1, 3 & 5 year performance and sector ranking.
HSBC Pacific Index
The HSBC Pacific Index fund is a prominent player in the Asian equity market, which aims to provide long term capital growth over 5 years or more. With £791.95 million in assets, the fund tracks the performance of FTSE World Asia Pacific excluding Japan Index. It invests in a range of companies within this index from both developed and emerging markets, including South Korea, Taiwan, China, and Australia, to achieve its growth objectives.
Over the past year, the fund delivered a return of 19.15%, significantly outperforming the sector average of 13.07%. Its three-year performance has been equally impressive, with a return of 14.38%, compared to the sector average of 2.27%. Over the past 5 years the fund has generated a strong return of 43.16%, surpassing the sector average of 25.53%
This consistent outperformance is due to its well-diversified holdings, particularly in the technology and financial sectors, which have been major growth drivers in the Asia-Pacific region ex Japan. Key investments include industry leaders such as Taiwan Semiconductor Manufacturing Co. Ltd., Samsung Electronics, and Commonwealth Bank of Australia.
As an index-tracking fund, it employs a passive investment strategy to replicate the performance of its benchmark closely. It maintains a low ongoing charge of 0.16%, which helps enhance returns further by minimising costs for investors.
This broad diversification and cost-efficient strategy makes it an appealing choice for investors seeking exposure to the Asia Pacific (excluding Japan) markets.
iShares Pacific ex Japan Equity Index (UK)
Launched in 2005, the iShares Pacific ex Japan Equity Index (UK) fund currently manages £2.55 billion of investors’ assets. Its primary objective is to provide a return on investment by closely tracking the FTSE World Asia Pacific ex-Japan Index. To achieve its goal, the fund mainly invests in equities from companies in the Benchmark Index and may also use other equity-related investments for additional exposure.
Over the past 1 3, and 5 years, the fund has consistently delivered impressive growth of 18.58%, 14.07%, and 44.28%, respectively. These results have significantly outperformed the sector averages of 13.07%, 2.27%, and 25.53%, demonstrating the fund's strong performance relative to its peers.
The fund's success can be attributed to its passive investment strategy, which follows the FTSE World Asia Pacific ex Japan Index. With an annual charge of just 0.12%, the fund also ranks as one of the lowest priced funds in the Asian equity market.
Jupiter Asian Income
The Jupiter Asian Income fund has consistently been one of the top-performing Asian equity funds.
At least 70% of the fund's assets are allocated to shares of companies located or listed in the Asia-Pacific region, excluding Japan, but including Australia and New Zealand. This diversified regional focus provides exposure to both developed and emerging markets, allowing the fund to tap into various growth opportunities across sectors and industries.
This five-star rated fund has built an impressive track record and currently manages £1.98 billion in client assets, making it one of the largest funds in the region. In the past year, the fund delivered returns of 23.36%, which was the highest of all 113 funds in the sector and almost double the sector average of 13.07%. Its performance over 3 years was equally strong, with returns of 40.03% again ranking at the top of its sector, and over 5 years, the fund generated growth of 60.73% which far exceeded the sector average of 25.53%.
However, as an actively managed fund it has a higher annual charge, which at 1.01% makes it among the most expensive in the sector.
L&G Asia Pacific Equity Income
The objective of the L&G Asia Pacific Equity Income fund is to provide income that exceeds the income generated by the FTSE Asia Pacific ex-Japan TR Net Index before the deduction of any charges. In addition to income, it targets long-term capital growth over rolling five years.
The fund is actively managed and invests at least 80% of its assets in shares of companies based in the Asia-Pacific region, excluding Japan but including Australia and New Zealand. It may also invest in companies whose primary business operations are in this region, even if they are quoted on stock exchanges elsewhere.
The fund has consistently outperformed the IA Asia Pacific ex-Japan sector across all measured time frames. Over the past year, it achieved a return of 17.57%, significantly higher than the sector average of 13.07%. In three years, it recorded a return of 25.92%, placing it second in the sector. Over five years, the fund delivered growth of 26.06%, surpassing the sector average of 25.53%. This outperformance highlights the fund’s effectiveness in capturing growth opportunities within the region.
By combining strong income generation with the prospect of capital growth, the L&G Asia Pacific Equity Income I Acc fund is well-suited for investors looking for a steady income stream from the dynamic and rapidly growing Asian equities.
L&G Pacific Index Trust
The L&G Pacific Index Trust fund has consistently delivered strong returns. Over the past 1, 3 & 5 years the fund returned 18.70%, 13.59% and 42.62%, each of which were comfortably above the sector average of 13.07%, 2.27% and 25.53%.
Established in 1997, the fund currently manages £1.54 billion in assets within the Asian equities. Its primary objective is to provide growth by tracking the performance of the FTSE World Asia Pacific ex Japan Index.
Using a passive investment strategy, the fund predominantly invests in companies within its benchmark index. For efficient management and to mitigate certain risks, it may also use derivatives. This approach allows the fund to maintain stability while adapting to market changes.
With a low ongoing charge of 0.19%, the fund offers a cost-effective way for investors to access Asian markets. Its diversified allocation across sectors like financial services, consumer cyclicals, and technology has contributed to its top performance by capturing growth opportunities within these high-potential industries.
M&G Asian Fund
The M&G Asian fund is a significant Asian equity investment vehicle, managing £304.01 million in assets. It targets both capital growth and income, intending to outperform the MSCI AC Asia Pacific ex Japan Index over five years.
The fund invests at least 80% of its assets in equities of companies across various sectors and market sizes within the Asia-Pacific region, excluding Japan. This approach offers a broad exposure to both developed and emerging markets in Asia.
The fund has consistently outperformed its sector peers. In the past year, it achieved a return of 20.68%, compared to the sector average of 13.07%. Over three years, it returned 24.02%, far exceeding the sector’s 2.27% average. Its five-year return of 46.41% is notably higher than the sector average of 25.53%, placing it among the best-performing Asian equity funds.
Its strategy is rooted in active management, with a specific focus on high-quality, large-cap companies that have strong growth potential. This approach, combined with a flexible allocation and selective sector exposure, establishes a solid foundation for sustained long-term returns.
Quilter Investors Asia Pacific (ex Japan) Large-Cap Equity
Launched on 10 July 2013, the Quilter Investors Asia Pacific (ex Japan) Large-Cap Equity fund has exhibited impressive performance in Asian equity markets. The fund's performance has been noteworthy, with returns of 15.05%, 22.84%, and 48.02% over the past 1, 3, and 5 years respectively. These figures significantly outpace the IA Asia Pacific Ex Japan sector averages of 13.07%, 2.27%, and 25.53% for the same periods, highlighting the fund's ability to generate superior returns in this niche market segment.
The fund aims to grow investors' capital and outperform the MSCI All Countries Asia Pacific ex Japan Index over any 5 years, after fees. With £305.92 million in assets, it invests at least 80% in developed and emerging markets across Asia and Australasia (excluding Japan), focusing on large-cap companies with potential for recovery and growth. Key holdings include Taiwan Semiconductor, Samsung Electronics, and HDFC Bank, which contribute to its strong sectoral positioning.
As an actively managed fund, it can adjust its holdings in response to shifts in market trends and conditions. This flexibility makes it a solid choice for investors seeking growth and stability in the Asia-Pacific region.
Royal London Asia Pacific ex Japan Equity Tilt Fund
The Royal London Asia Pacific ex Japan Equity Tilt Z Acc fund, managing £1.71 billion in assets, is consistently ranked among the top Asian equity funds. Its primary goal is to deliver capital growth and income over a medium-term period of 3 to 5 years.
This fund is structured to match the performance of the FTSE World Asia Pacific ex Japan GBP Net Total Return Index, after deducting charges, over rolling three years. Recent performance underscores the fund’s strength, with a 17.86% return over one year compared to the sector average of 13.07%. Its three-year return stands at 13.69%, compared to the sector's 2.27%, and over five years, it delivered 43.15%, outperforming the sector average of 25.53%.
A core element of the fund's strategy is its focus on responsible investment, integrating Environmental, Social, and Governance (ESG) insights into its stock selection. It also maintains a carbon intensity at least 30% lower than the benchmark, favouring companies with potential for transitioning to a low-carbon economy. This dedication to sustainability appeals to investors who prioritise both growth and ethical investing.
The fund’s success is attributed to several factors, including strategic investments in high-growth sectors, strong ESG integration, and a focus on companies with robust growth potential in the Asia-Pacific ex-Japan region. This balanced approach supports competitive returns and aligns with modern standards in sustainable investing.
Schroder Asian Discovery Fund
Launched on 15 March 2012, the Schroder Asian Discovery Fund is designed for investors seeking long term capital growth by investing primarily in small- and mid-cap companies across Asia (excluding Japan) and selected emerging markets. Its main goal is to outperform the MSCI AC Asia ex Japan Small Mid Cap Index over 3 to 5 years.
The fund has delivered robust returns, achieving 17.05%, 7.86%, and 50.05% over the past 1, 3, and 5 years, respectively, outperforming sector averages of 13.07%, 2.27%, and 25.53%. This strong track record reflects the fund's effective use of growth opportunities within its focused market segment.
The fund’s investment strategy emphasises selecting high-quality, smaller companies—defined as those in the bottom 30% by market capitalisation within each market—that possess attractive valuations. These early-stage companies offer notable growth potential compared to larger firms, which has positively impacted the fund’s performance.
To manage risk and enhance operational efficiency, the fund managers may use derivatives selectively and maintain cash reserves as needed. By investing across diverse sectors such as technology and consumer goods, the fund taps into the rapid growth within Asian and emerging markets. This thoughtful, diversified approach has helped it consistently deliver solid returns and stand out among sector peers.
Schroder Asian Income Fund
The Schroder Asian Income fund is a £1.31 billion fund targeting long-term capital growth and income over a three to five year horizon. The fund’s strategy allocates at least 80% of its assets to equities and equity-related securities in the Asia-Pacific region, specifically focusing on high-quality companies in markets such as Australia and New Zealand, while excluding Japan.
The fund's performance has been excellent which earned it 5 star rating. Over the past year, it delivered a return of 17.23%, well above the sector average of 13.07%. Its three-year performance stands at 21.06%, significantly higher than the sector's 2.27% average. Over five years it posted growth of 39.51%, consistently placing it among the top performers in its sector.
Managed by Richard Sennitt, an experienced specialist in Asian equities, the fund prioritises high-quality, dividend-paying stocks. This income-oriented strategy not only supports steady returns but also makes the fund a reliable choice for investors seeking both regular income and long-term growth potential.
The Asian Equity Market Rebound from The 2021 Downturn Signals Strong Growth Potential
After a sharp recovery from the initial COVID-19-induced downturn, Asian equities reached a peak on 17th February 2021, only to face another significant pullback. This downturn was driven by a series of pressures, beginning with stringent regulatory actions in China, where authorities targeted the technology and education sectors as part of broader economic reforms. The regulatory crackdowns dampened investor confidence in Chinese markets, particularly impacting large-cap tech stocks. Alongside this, global inflation was on the rise, prompting central banks worldwide to raise interest rates, which created an unfavourable environment for equities, especially in emerging markets reliant on foreign capital. The region’s recovery momentum stalled, as volatility weighed on returns.
In addition to regulatory pressures and inflation, broader economic concerns added to the market’s challenges. China’s economic slowdown, partly due to ongoing issues within its real estate sector, exerted downward pressure on the region. For countries heavily dependent on Chinese demand and trade, such as South Korea and Taiwan, the impact was particularly pronounced. Meanwhile, rising energy prices and geopolitical tensions, notably between the US and China, further restrained growth across several Asian markets. By late 2022, these cumulative factors had left many Asian equities significantly off their previous highs, with the market bottoming out on 28th November 2022.
Since that low point, however, Asian equities have rebounded strongly, averaging growth of 22%. This recovery has been supported by resilient sectors such as technology and consumer goods, which continue to benefit from strong domestic demand and government policies aimed at bolstering economic stability.
With a supportive policy environment, strong sectoral growth, and competitive advantages in technology and manufacturing, the outlook for Asian equities has turned increasingly positive. Analysts now regard the region as a key opportunity for global investors, especially those with higher risk tolerance. The post-2022 growth trajectory suggests that Asia is well-positioned to capitalise on both domestic and international demand, making it a crucial component in any diversified investment strategy aimed at capturing long-term growth potential.
5 Key Sectors Driving Growth in Asian Equities
Asian equity funds are growing in popularity with many institutional asset allocation models increasing portfolio allocation to this region. Despite its history of relatively high volatility, it has a lot of untapped potential.
The most influential sectors in Asian equities vary by region, but broadly, they include technology, financials, consumer discretionary, healthcare, and industrials. Each of these sectors plays a critical role in shaping the performance of Asian markets, given the unique economic drivers and growth trends across countries like China, Japan, South Korea, Taiwan, and emerging markets in Southeast Asia.
1. Technology
The technology sector is a dominant force in Asian equities, with companies involved in semiconductors, consumer electronics, and software development leading the way. Countries like South Korea and Taiwan, home to major firms such as Samsung and TSMC (Taiwan Semiconductor Manufacturing Company), are key global players in semiconductor production. China also has significant influence, especially in e-commerce and internet-based technology, with giants like Alibaba and Tencent. Given the ongoing demand for technological innovation, digital transformation, and emerging areas like artificial intelligence and 5G, this sector holds substantial influence over the region’s equity performance.
2. Financials
Banks, insurance firms, and financial service companies represent another crucial segment in Asian markets, especially in economies like Japan, China, and India. Financial institutions in Asia are essential for capital allocation, economic growth, and supporting both domestic and international trade. In markets like China and India, financial companies are also benefitting from rising middle-class wealth and growing demand for banking, investment, and insurance products, which fuels growth in this sector and influences broader equity market movements.
3. Consumer Discretionary
With a rising middle class and increasing disposable incomes, consumer discretionary stocks are particularly influential in Asian economies. This sector includes industries such as retail, automotive, and leisure, which benefit from greater consumer spending. Major companies like Toyota in Japan and leading e-commerce platforms in China contribute significantly to the sector’s performance. As urbanisation continues and digitalisation expands, demand for products and services in this sector grows, amplifying its impact on Asian equities.
4. Healthcare
Healthcare has emerged as a high-growth sector across Asia, driven by ageing populations in Japan and China, as well as the growing need for accessible healthcare in countries like India and Southeast Asian markets. Companies involved in pharmaceuticals, biotechnology, and medical equipment are particularly influential, as governments across Asia invest more in healthcare infrastructure. Additionally, the rise in demand for healthcare services and innovations due to the pandemic has made this sector a major focus for investors seeking long-term growth in the region.
5. Industrials
The industrial sector, encompassing manufacturing, construction, and infrastructure, is another significant driver in Asian equities. This sector is especially vital in countries like China and South Korea, which are heavily invested in global supply chains. Infrastructure development, supported by government initiatives like China’s Belt and Road Initiative, also plays a central role in driving demand for industrial goods and services. Furthermore, as countries in the region invest in renewable energy and environmental sustainability, there is increasing momentum in industrials, particularly in clean energy, transportation, and materials.
Each of these sectors contributes to the resilience and growth potential of Asian equity markets. For investors, understanding the influence of these key sectors offers insight into the broader opportunities and risks present in Asian equities, where economic trends and government policies are often sector-driven.
Summary
The Asian equity market, while volatile, offers substantial growth potential for investors with a long-term perspective. Periods of downturn are often followed by rebounds, with recovery opportunities often driven by sectors such as technology and consumer discretionary, especially when accommodative policies are implemented.
As discussed in our report above, certain Asian equity funds have shown resilience and even achieved strong performance despite market downturns.
As a sector that is often volatile, the performance and quality of funds in this sector can vary widely. It is recommended investors in this region should have a fully defined risk strategy that best fits their investment timelines.
Book a no obligation call with a Yodelar Investment adviser to find an optimal strategy that best suits your investment needs.
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