Investment approach

DJE - Asia focuses on equities with strong substance and growth as well as companies with stable and promising business models from the Asia-Pacific region. The RCEP free trade zone, which was established in 2020, is the largest in the world in terms of its share of global GDP and is expected to contribute to the region's dynamic growth (see chart). The investment process combines fundamental top-down (FMM) and bottom-up analysis. This is to ensure that both opportunities and risks are identified in a timely manner. In the fund, preference is given to companies with attractive earnings growth. The decisive investment criteria include sustained growth, stability of corporate earnings as well as innovative strength and a leading competitive position. The fund management actively controls the investment quotas in regions, countries, sectors or companies of the Asian economic area free of index specifications.

Monthly Commentary

In October the Asian stock markets generated mostly weak and mostly negative results – most notably the Hong Kong stock exchange recorded a double-digit slump. The Japanese stock market, on the other hand, performed well. Decisive for the negative development in Asia was above all the continuation of China’s zero-covid strategy as well as the confirmation of Xi Jinping as state president in a third term. Market participants interpreted the reelection as a bad sign for the relationship between China and other large economic areas such as the USA and the euro area, as well as the continuing geopolitical tensions between China and Taiwan. On the other hand, Japanese equities benefited from the continuously pursued low or negative interest rate policy (-0.10% since 2016). In this market environment the price of the DJE - Asia fell by -6.14%. Its benchmark index (100% MSCI Daily TR AC Far East Ex Japan) lost -8.84%. A predominantly negative picture emerged at sector level in the Asian investment region in October. Relatively the best performing sectors, i.e. with the largest price gains, were energy and technology (both underweighted in the fund) as well as healthcare (overweighted in the fund). The sectors that ended the month below average, i.e. with the largest price losses, were luxury and consumer staples as well as real estate (all three overweighted in the fund). Overall, the sector weighting had a negative impact on the fund's price performance against the broad Asian equity market in October. At the individual stock level the strongest performance contributions came from positions in the two South Korean technology companies Samsung SDI (batteries, components for semiconductors and displays) and Samsung Electronics (electronics), among others, as well as the Indian private bank HDFC and the Japanese pharmaceutical company Astellas Pharma. On the other hand, the fund's performance was burdened by various individual stocks, including the three Hong Kong companies CK Hutchison (conglomerate; including telecommunications, infrastructure), Kingboard Holdings (investment holding company; mainly laminate and chemical product manufacturing and distribution) and Guangdong Investments (investment and ownership company; mainly infrastructure projects, including water supply and energy) as well as the Chinese technology company Alibaba. During the month, the fund management increased the sectors industry, technology, financial services and financial institutions . On the other hand, the weighting of the household goods sector was reduced. Regionally the weighting of Hong Kong was reduced and the weighting of South Korea and India was increased. The investment ratio was 90.67% (90.08% previous month). At the end of the month prices denominated in Hong Kong dollars were partially hedged.

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