A: First, it’s an expanding universe. If you go back to the early ‘80s, you are talking about six or seven markets that constituted what we now regard as Asia. People did not invest in India and they didn’t even mention China.

Back in the ’80s and ‘90s there were very few safe places in Asia. Over time, politics have improved, transparency has improved, accountability has improved and the dangers at the macro level have diminished. It’s now rare to want to avoid a market on a macro view. Some of the previous weak financial markets of Asia have now grown to be mature and they are now evaluated on global basis for investment destinations.

Q: How has the investors’ attitude to investing Asia changed?

A: Over time, the family structure in Asia has almost been vindicated. The American investors didn’t like the fact that these companies were all run by families and they had an overwhelming belief in professional managers, hired hands, executives. Those hired hands in the U.S., in many cases, have led to disasters, because they had a very shortterm perspective.

In Asia, they have a great belief in ancestors, children and grandchildren. Most businessmen are trying to make money for their family for many generations. They are not going to sell the company out in a couple years and go and retire in the Bahamas.

In the early days you were a victim of the mentality that Asia was a sort of casino. If you were a brave investor in the UK or America, you took a few spins of the wheel, tried to make some quick money, and then you got out. That was very damaging as it meant people weren’t looking at the long-term potential in Asia. It meant there were a lot of fast inflows and outflows.

In the recent two or three years increasingly people have stopped treating Asia as a quick trade, but as a proper investment. That has led to good liquidity flows, greater stability, and less panic. The international investor’s attitude to Asia has grown up. They now see it as a strategic and permanent part of their portfolio.

Q: How do you go about stock selection?

A: From top down, we are looking on the risk avoidance perspective. We are not being very aggressive, deliberately overweighting or underweighting markets for their own sake. We just don’t pay much attention to benchmarks and we don’t want proxy holdings in the fund. We want every name in the portfolio to be there because there is a fundamental reason for it.

Our biggest holding in Thailand, for years, has been Minor International, a hotel company. They started in pizza and then they got into hotels. They have a Four Seasons franchise in Thailand now. This stock went up about tenfold over the time we held it. The market during that time was rocky and turbulent. People often say, “You can’t perform in a market that’s not performing.” I think that’s nonsense. You can be in the right stock in the wrong market and you can be in the wrong stock in the right market. There are always opportunities.

Q: How is your research process organized?

A: We start with the risk analysis for the countries - we look in the currencies, government, policy, inflation. Very quickly, we can move down to themes. Thematic portfolios are really important in our funding. There are themes we like and we play again and again in the same market, and in other markets. So, you can start from the broad theme.

Then we narrow that down to sub-themes. Whenever you talk about growing affluence in Asia, people always think you mean buying Gucci handbags and BMWs, and I mean a lot more serious things than that. For example, education, health care, medical treatment, travel, tourism, entertainment and the whole quality of life improvement that you would expect of the people, who have more money in their pocket.

Then from the sub-theme level we go down to the company level. Then we try to identify what the best play on tourism in Singapore or Thailand is. That is where the ability to skip from market to market helps because you find that markets will be at different stages of recognizing that particular subtheme.

Then we are left with 80 or 90 names in a portfolio. I sometimes get the question, “How can you keep on top of 80 or 90 names?” If you divide them into those themes, sub-themes and sub-sub-themes, they begin to form a pattern. It really isn’t 80 completely different ideas. It’s often an adaptation, moving to a different market. It’s a similar theme that we are pursuing and that’s how we get down to the stock level.

Q: Can you give an example of some investment themes that you consider important in the context of Asia?

A: Let’s take tourism, for example. People often think that’s a trivial theme, but for a lot of the Asian countries, tourist income is by no means trivial. It is an important industry and a sort of natural comparative advantage, especially set in the regional context. I have a notion of Asia being a sort of extended family, where each family member has different skills and different resources, and adds something different to the party.

Tourism is not to be underestimated because I remember when nobody went to Thailand on holiday at all. It would be like going to Nepal or Sri Lanka. Today, there are people living in the midlands in England working as accountants who own a place in Thailand. It has become completely normal. I think Vietnam will soon see the same thing happen. Vietnam has the rich history, the ancient culture, beautiful beaches, long coastline and just everything you want if you are a tourist.

Q: What risks are you cognizant of and how do you mitigate them?

A: Being an active stock selector the main risk is at stock level. We can be fairly aggressive on our stock selection, therefore it is important to put a risk parameter on that exposure. We will only typically own about 3% maximum in any one position. That is sort of safety net valve, sort of risk reduction. If we are right about it and it does well, it will have a nice impact on the portfolio without betting the ranch.