Livewire | 50% of the global economy is missing from most Aussie portfolios. Here’s how to add it in

I heard an extraordinary fact recently that stopped me in my tracks – approximately 60% of the global population lives in Asia.

Yet for many Australian investors, “global” still largely means the United States. Over the past two decades, the world’s economic landscape has shifted significantly, and one would argue that nowhere has that shift been more profound than across Asia.

The region’s transformation from export-driven growth to increasingly powerful domestic economies has reshaped global trade, consumption and capital markets, with China now central to that story.

The Platinum Asia Fund (ex-Japan) is one of the rare managed funds to have navigated this change over more than 20 years.

I spoke with portfolio manager Cameron Robertson about what has sustained the strategy through multiple market cycles, and how investing in Asia provides exposure to the world’s largest population centres, along with all the opportunities for investors this creates.

INTERVIEW SUMMARY

Two decades on the ground

Robertson says Platinum’s connection to Asia predates the firm itself.

That continuity has allowed the team to build familiarity not just with companies, but with the people and systems behind them.

“You build up an understanding of the entrepreneurs, the families, the interplay with regulators, governments, which really helps give the confidence you need to ride out some of these cycles that you sometimes get in less developed markets.”

A region transformed

Robertson says that though their underlying investment philosophy hasn’t changed over the years, the opportunity set has.

Markets also once considered too small to matter are now becoming investable in their own right.

“You’re also seeing some of the smaller markets – Indonesia, Malaysia, Thailand, Vietnam – starting to come into their own as consumers are getting wealthier and those economies are continuing to develop.”

Beyond the tech narrative

Technology supply chains in Taiwan and Korea remain important, but Robertson says the region is far broader than just the tech opportunity. Some of the most compelling opportunities are appearing in areas currently out of favour.

China, despite being out of favour with many investors following its property crisis, remains one of the fund’s largest geographic exposures, accounting for close to half of the portfolio.

These valuation gaps have also extended to Southeast Asia, with countries such as Vietnam and Indonesia standing out.

Robertson highlights Astra International (IDX: ASII), Indonesia’s dominant automotive distributor with roughly 50% market share, as an example of structural growth mispriced by markets.

A diversification investors may be missing

For Robertson, the investment case for Asia isn’t just about returns but the concentration risk in most Australian portfolios.

“I think for most people when they look at their portfolio, they’ll probably find that it’s very heavily skewed to the US. Makes sense. Markets in the US have done very well. People have ended up chasing performance there and even just naturally letting that position grow,” he says.

However, “they probably recognise that they’ve got quite a lot of concentration into that market, and perhaps even quite specifically into tech sectors.”

Robertson says Asia offers a way to rebalance that exposure while still accessing growth.

Managing the risks 

Investing in developing markets inevitably brings different risks, particularly around governance and regulation.

“That’s really the value of having an experienced fund manager who knows the region, knows the companies, knows the founders and the families behind them,” Robertson says.

Portfolio construction, diversification and the ability to manage currency exposure or short markets, he says, are all part of navigating those complexities.

“Our job is to navigate those risks and try to dodge the minefields that can be present in some of those emerging markets.”