Pacific Horizon

Despite the significant headwinds that have faced both Asia and growth strategies during the last 12 months, Pacific Horizon’s (PHI’s) NAV has held up so that its long-term (five- and 10-year) track record of outperformance versus peers (see pages 19 and 20) remains intact.

Its portfolio appears to continue to offer strong growth prospects (forecast earnings growth of 14.8%, versus 5.7% from its benchmark; 8.0% forecast sales growth versus 3.5% – both of which might suggest that its bias to growth and quality remains intact), but it still appears to be cheap when compared to its history (a P/E of 13.7x versus 12.9x for the benchmark – it has historically traded at a much higher premium).

With signs that interest rates have peaked, particularly in the US, there is potential both for a rerating of its underlying holdings and a narrowing of its above long-term average discount. The managers have been adding to China to take advantage of what they believe is an extreme valuation opportunity.