Asia Pacific ex Japan–USD & EUR Denominated Share Classes

Asia Pacific ex Japan equity funds’ performance ranges from -0.59% to 40.34% over the last 52 weeks (ending February 25, 2010), in USD terms. The best 5% of the funds outperform the market (pegged to the MSCI AC Asia Pacific ex Japan) by approximately 11.9% and the worst 5% underperform by approximately 14.4%. What role do favourable style allocations play? We examine style/capitalization and country factors describing the best and worst funds on an aggregate basis. When funds are aggregated in a group, their common factors crystallize and specific bets are diversified away, which provides the basis for such an analysis. Our analysis suggests that the top- and bottom-performing funds, on average, had focused on the same countries in the region, albeit with somewhat different levels of exposures. The top funds outperformed through selecting better performing stocks within those countries, which is reflected in their positive Selection return; on the other hand, the bottom group displayed negative Selection, implying that although they were invested in the same countries as the top funds, their intra-country stock selection hindered their performance. Both groups of funds are mostly exposed to Cash, Hong Kong and Singapore, loadings that represent close to 52% of the top funds exposure and 58% of the bottom funds exposure. Using an attribution framework, the impact of each bet on the overall performance is quantified. Please note that our conclusions may change if a different timeframe is used to select the best/worst funds.