Pacific Horizon is a highly active portfolio of Asian equities selected for their long-term growth potential. The managers, Ewan Markson-Brown and Roderick Snell, look for companies with sustainable competitive advantages, which are often intellectual properties or new technologies.
The company invests half its assets in the technology sector, with significant weightings to other industries expected to benefit from growing middle class consumption in China, in particular. China including Hong Kong is the largest country allocation, and the trust is focused on North Asia, with South Korea and Taiwan also significant weightings.
The trust had a barnstorming 2017 as its growth style came into favour and technology stocks in Asia led the markets. Over the long run it has now significantly outperformed its open- and closed-ended peers as well as the regional benchmark, although given its highly active approach it should be expected to go through periods of significant under- and over-performance.
Gearing is limited, but the highly active approach adds enough risk in itself, with the managers aiming for long-term outperformance from long holding periods. They are prepared to hold on to stocks through rough macro-economic environments if they think the fundamental story is intact.
The trust is now trading on a slight premium after sentiment towards the region and the strategy rapidly improved last year. The valuation metrics on the underlying portfolio are also high, although Ewan and Roddy believe this is because the numbers don’t reflect the growth potential in their portfolio.
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