Punjab is building 100,000 of them,” she explains. Kerry Series is fond of saying that the world has globalised to the point where the old “developed/ emerging” distinction is “dead”. Yet, some distinctions within a fund’s equity portfolio are still a good thing. As Simon Eagleton, the soonto- be Asia-Pacific leader of Mercer Investment Consulting points out, the asset classes which best reward active management are often those with the fewest funds managers and sell-side analysts crawling all over them – the Mercer data which tracks the active premium reflects poorly on MSCI Worldbenchmarked global equities, but very well on niches such as New Zealand equities or Japanese small caps, which both feature most prominently in pan-Asia mandates. The deeper your mandates go into individual Asian markets, the more they benefit from that other friend of the active professional manager – “mum-and-dad” speculators, according to Russell Investments’

Australasian chief investment officer, Symon Parrish. Long an investor in Asiaspecific and even Asia-Australia mandates through the Pacific Basin fund it sells outside this country, Parrish says Asia offers a welcome diversity of markets for the “flexible” specialist manager. “You’ve got extremes in the region from Taiwan, which is a really hot trading market where everybody piles into an idea that goes berserk, and then collapses in a heap. At the other extreme you’ve got India, which has more listed stocks than the rest of the world combined, but a really wellstructured, if bureaucratic, system of corporate governance and a retail investor population that’s actually a stabilising influence,” Parrish says. “The Indian mums-and-dads sold out a lot of money at the top of the last bull market and then started re-investing early last year”. These examples might be too esoteric for the average super fund CIO, but Eight Investment Partners’ Series still advocates that investors should at least think of the world, and their equity portfolio mandates, in three “blocs” – the Americas, Europe/Middle East, and pan-Asia including Japan and Australasia.

Series concedes it would be a big stretch for local investors ever to surrender the tax advantage of pure Australian equity allocations in favour of pan-Asia plays, however he believes such a restructure would be a net benefit to returns, harnessing specialisation and throwing up greater numbers of genuinely mispriced opportunities. “The problem with sticking to your traditional MSCI World mandate is you’re getting 5 per cent exposure to Asia ex-Japan, whereas its share of global GDP is 25 per cent,” says AMP Capital Investors’ Wilson. “And one problem with accessing Asia through an emerging markets manager is that then you get big Latin American holdings that are really just replicating the resources’ weighting you have through your domestic equities.” Emerging markets managers are no longer looking at a universe that’s meaningful, Series argues, “while most global managers are really tooled up to only look at Europe and the US, because that’s where the capitalisation has traditionally been.”