Although some 6,000 miles separate their working desks, Richard Titherington and Ayaz Ebrahim seem to make a good investment partnership.
For the past year, these two executives of investment manager JPMorgan Asset Management – assisted by video technology and conference calls – have been jointly running the company’s Asian Investment Trust.
Titherington from London where he is now based after a long stint working out in the Far East. Ebrahim from Hong Kong where he was born and has spent the past 30 years working in investment management.
Team work: Ayaz Ebrahim, left, and Richard Titherington, right, are both executives of investment manager JPMorgan Asset Management
So far all seems to be going well in this investment marriage judging by the results with the trust recording overall returns for the past year of 16 per cent, figures better than the average of their peers.
‘It is working,’ said Ebrahim last week, in between meetings in London as part of a four-day trip to the UK where he was taking the opportunity to see some of the trust’s key shareholders – as well as pop in and say hello in person to his co-pilot on the fund.
‘We have informed debates over what stocks to hold and which ones to sell.’ But he also confirmed that it was his head on the proverbial chopping block if things ever started to go awry. ‘Yes, ultimately, it is my call. I have the ultimate decision over what goes. Richard has made that fact very clear.’
In point of fact, the trust is far more than these two influential JPMorgan executives – Titherington is the asset manager’s head of emerging markets and Asia Pacific equities while Ebrahim chairs the Asia Pacific asset allocation committee.
It draws upon the company’s vast pool of analysts, economists and strategists who all have an input over the stocks that get bought and sold – and the trust’s exposure to individual stock markets. The result is a 64-stock portfolio with holdings in ten countries – the trust does not invest in either Australia or Japan as some rivals do.
It is the economists and strategists that influence the trust’s country exposure, grading each stock market between one to five, one being most attractive. This is done according to factors including company valuations, currency weakness or strength and the performance of the underlying economy.
The holdings are based on ideas provided by the analysts who come up with potential stock picks in three classifications – premium, quality and companies that can be traded profitably over an 18-month to two-year period.
Ebrahim is insistent it is the stock picking which provides the potential for greatest investor rewards.
The trust’s key holdings are familiar names – Chinese internet giants Alibaba and Tencent as well as South Korean electronics firm Samsung. But among its smaller stakes are positions in Indonesian companies Bank Central Asia, Astra International and Telkom Indonesia.
Ebrahim is optimistic about the economic outlook for the Asian region. He also thinks the agreement struck between President Trump and Kim Jong Un, leader of North Korea, on denuclearisation is ‘good news’ – although he is not confident North Korea will stick to its side of the bargain.
Yet he also has some concerns, namely the debt overhang in China (nevertheless, the trust’s largest country position at 34 per cent) and the negative impact of rising oil prices on the Indian economy.
While he believes both issues should not become serious ones, they have the potential to unsettle stock markets.