Manulife Asset Management Services Bhd has launched the Manulife Asian Small Cap Equity Fund, a new wholesale fund for high net worth investors.

The fund feeds into the Manulife Global Fund - Asian Small Cap Equity Fund, which is managed out of Hong Kong by Manulife Asset Management (Hong Kong) Ltd, giving local investors access to more than 14,000 small or mid-cap companies listed on exchanges in Asia-Pacific. However, it will focus mainly on North Asian countries.
 
As at Feb 27, 21.22% of its portfolio was invested in South Korea and 18.58% was invested in Hong Kong.

Linda Csellak, head of Asia Pacific Equities and lead manager for Manulife Asset Management's regional Asian Small Cap Strategy, says small cap equities in Asia are attractive as they have underperformed the market for the last three years. "This is extremely unusual compared with markets in other regions. We think small cap equities are looking much better this year and will start to outperform," she adds.
 
She also pointed out that year-to-date, the Asia equity market has started to outperform the US equity market, especially in South Korea and Taiwan.
 
Csellak notes that the South Korean government has invested heavily in its healthcare companies for the past 10 years. As such, these companies are gaining traction and enjoying their harvest period.
 
She also favours Chinese equities listed on the Hong Kong equity market as they performed poorly during the last quarter. "These Chinese companies in the Hong Kong market are still very cheap compared with others in China. They have gradually started to perform better."

Moreover, the situation is set to change with new developments last month when the government announced that insurance companies in China were allowed to invest in the Hong Kong market.

The target fund's assets under management (AUM) stood at US$443.3 million in March. For asset allocation, 95% of the fund's net asset value (NAV) will be invested in the target fund, while 2% to 5% of its NAV will be invested in money market instruments and current and fixed deposits.

The target fund provided a 9.74% return for the year to March, outperforming the Asia Pacific ex-Japan Small Cap Index by 5.06%. Since its inception in 2006, the fund has returned 154.67%. 

The minimum initial investment for the fund is RM10,000. Investors with total net personal assets exceeding RM3 million or corporations with total net assets exceeding RM10 million qualify to invest in the wholesale fund. 

The sales charge is 5.5% if the fund is bought via the banking channel and 6% if investors purchase the units through agents. The fund's management fee and trustee fee is 1.8% and 0.04% per annum respectively.
 
Manulife Asian Small Cap Equity Fund is distributed through Citibank branches nationwide and by Manulife Asset Management Services' unit trust advisers.