Why Jupiter’s Apac income fund overweights Singapore stocks

[SINGAPORE] Investors, local and international alike, may lament Singapore-listed stocks’ poor growth potential and lack of liquidity, but Jupiter Asset Management has found a few good reasons to be overweight Singapore.

Geographically, 17.8 per cent of the Jupiter Asia Pacific Income Fund was allocated to Singapore firms as at Oct 31. Taiwanese stocks made up 29.9 per cent of the fund, and Australian companies, 23.6 per cent.

In comparison, the benchmark MSCI AC Asia Pacific ex Japan Index (USD) has 28.23 per cent Chinese stocks, 20.11 per cent Taiwanese, 14.96 per cent Indian, 12.81 per cent Australian, and 12.67 per cent South Korean. Singapore is only a part of the remaining 11.22 per cent of the index.

“The benchmark weighting for Singapore is 3 or 4 per cent, and we have 18.8 per cent (as at Dec 5),” said Sam Konrad, investment manager in the Asian equity income team at Jupiter Asset Management.

“The way we manage our fund is that we are not focused on what the benchmark is. We’re just trying to maximise returns for our investors.”

In an exclusive interview with The Business Times, he noted: “We describe our process as top-down stock picking, which we think is quite different to most of our peers. We think about domestic politics, geopolitics, demographics, environmental risks, liquidity; and from those top-down views, Singapore, to us, stands out.”

Granted, the fund is relatively concentrated. It comprises only 26 stocks, of which Singaporean companies make up six. But this was by design, to give a reasonable weighting to all of the holdings, he added.

“We have high conviction, and we prefer to own just the very best company in any particular subsector in any particular country.”

Jupiter Asset Management is an active asset manager headquartered in London with £50.4 billion (S$87.2 billion) in assets under management (AUM). The Jupiter Asia Pacific Income Fund had an AUM of £113 million as at Oct 31.

The fund has a preference for developed markets, and Singapore stood out for its stable government, a growing population driven by skilled or wealthy immigrants, and consistent economic growth – sometimes “at a higher rate than even some emerging markets”, pointed out Konrad.

“It’s often a misunderstanding that emerging markets necessarily grow faster. That’s not always the case,” he said.

“The Singaporean economy has been growing at a pretty fast rate for quite some time. You don’t have inflation concerns in Singapore, you have an appreciating currency against most other currencies, and we like to invest in countries where we think the currency is more likely to appreciate rather than depreciate.”

The city-state’s economy grew by 4.4 per cent in 2024, with full-year inflation averaging 2.4 per cent. The Singapore dollar has also appreciated year to date, trading at US$0.77 as at Dec 5, from US$0.74 on Jan 1. 

A DBS report in October also suggested that the Singapore dollar could reach parity with the greenback by 2040.

Emerging-market exposure

Investing in Singapore companies also provides exposure to the broader South-east Asian region without actually investing in specific countries, noted Konrad. Companies in the Republic generally have stronger corporate governance and balance sheets, he added.

“We like the management teams of the companies that we invest in, and often the liquidity is better for the Singaporean companies than if you go directly into those smaller South-east Asian markets.”

DBS Bank and Singtel are among the top 10 holdings in the fund, which also includes ST Engineering , Capitaland Integrated Commercial Trust and Genting Singapore.

Owning a company such as Singtel gives the fund exposure to other telco markets in India, Australia, Thailand, and the Philippines, said Konrad. “It also gives us exposure to the data-centre business, which (it is) growing. (There is) also an IT services business; and we also expect strong shareholder returns, particularly from (Singtel’s) dividend.”

With these broadened exposures come a heightened level of risk. For instance, a network failure prevented Australian customers of Singtel-owned phone company Optus from contacting emergency services, which led to multiple deaths earlier this year.

“But we think it’s less risk owning a company like Singtel, than owning a company that is exposed to only one telco market. Singtel itself is very diversified, so even if there’s a problem in one of its markets, it shouldn’t affect significantly the rest of the group,” said Konrad. 

“We think that the valuation placed on the Australian business is actually already quite low. Most of the value in Singtel today is through (its) stake in Bharti Airtel in India,” he added.

The fund also made a recent allocation to Nasdaq-listed Joyy, a Singapore-domiciled company that in February sold its ownership of YY Live to Baidu. YY Live is a video-based, live-streaming business that is available only in mainland China.

Joyy currently owns Singapore-headquartered Bigo Live, a global live-streaming platform available outside of mainland China. 

Jupiter’s Apac income fund has historically been underweight China since it was launched in the year 2000. But in July 2022, the fund managers made a decision to pull out of China entirely, in response to investor demand amid shaky US-China relations. 

As a result, the fund has underperformed by 1.9 percentage points year to date relative to the MSCI benchmark, which has 28.23 per cent allocated to Chinese stocks. Even so, the fund is up 21.8 per cent year to date, and has delivered a 10-year return of 164.4 per cent.

“We like the fact that within Asian equities you can find that real mix of developed markets and emerging markets and the tech sector. And you can also find that combination of both growth and dividend income. If you think about the US equity market, for example, you can start from being able to find growth, but not much in the way of income. Look at European equities – you can find income, but not much growth,” pointed out Konrad.

Additionally, “if the US dollar continues to weaken in 2026, then, historically, that’s been a very good time to invest in Asian equities… So we’re quite optimistic about the outlook heading into next year”, he said.