FSA asked Darius McDermott to select two strong performing Asia ex-Japan equity strategies. He chose the Federated Hermes Asia ex-Japan Equity fund and Man Asia (ex Japan) Equity fund.

According to McDermott, Federated Hermes Asia ex-Japan Equity fund is a concentrated fund investing in emerging markets within the Asia ex-Japan region. “Lead manager Jonathan Pines is willing to buy all types of companies if the price is right. He actively invests in stocks that are currently out of favour but which he believes are likely to perform better in the future,” he said.

Man Asia (ex Japan) Equity also has a concentrated portfolio which can invest in Asian companies of all sizes. “The team look to capture the turning points in earnings revisions where there has historically been significant potential to generate alpha,” said McDermott. The strategy uses a combination of top-down and bottom-up concentrated risk taking, with the stated objective of alpha or excess return through the economic cycle.

Investment approach

	Federated Hermes	Man Group
Size	$6.37bn	$1.97bn
Inception	2012	2020
Managers	Jonathan Pines, Sandy Pei	Andrew Swan
Three-year cumulative return	72.76%	76.92%
Three-year annualised return	20.89%	21.81%
Three-year annualised alpha	2.34%	2.53%
Three-year annualised volatility	17.63%	18.52%
Three-year information ratio	0.36	0.69
FE Crown fund rating	****	–
OCF	1.61%	1.96%

“The investment philosophy of Federated Hermes Asia ex-Japan Equity fund is to be contrarian, and Pine typically likes to go against the grain, often buying stocks which have underperformed,” McDermott said. The fund has no defined style bias, and the manager will invest in any companies that are attractively priced relative to the quality of the underlying business.

“Pine also prioritises those where the potential for gains is greater than the risk of losses,” he added.

The fund is limited to a maximum overweight or underweight of 20% relative to the index for countries and sectors. “In practice, this is a very loose constraint which has little impact. The fund’s emphasis on valuation has historically led to an underweight to India and an overweight to cheaper markets such as South Korea and China,” McDermott noted.

The core of the Man Asia (ex Japan) fund’s investment philosophy is based around relative earnings revisions. Indeed, there is strong evidence to suggest earnings revisions have been one of the top-performing factors in the broader performance of Asian equities.

“Therefore, the team focuses on capturing turning points in companies that have high earnings per share revision potential over the next 12 to 18 months,” said McDermott.

The team complement their bottom-up analysis with top-down macro analysis. Asian markets and currencies can be volatile.

“This analysis can help explain how different countries, industries and styles will perform. It helps the team adjust the portfolio to deliver on their investment objective of generating alpha. The fund will be tilted towards the countries, industries and styles the team most favour,” McDermott said.

While both strategies have flexibility in terms of style, McDermott argues that the Federated Hermes fund has more of a contrarian value/price-to-quality focus, while the Man fund is more of a growth-at-a-reasonable-price style – with a focus on sustainable earnings growth and strong business franchises.

 Both funds have exposure to the booming Korean market, and there are some crossover in holdings with names like TSMC, Samsung Electronics and Tencent in both top 10 holdings, but there are also clear differences as well.

For example, the Man fund has a greater exposure to technology, “reflecting a growthier style”. In contrast, the Federated Hermes fund has greater exposure to sectors such as consumer discretionary and staples.

The valuation focus of the Federated Hermes strategy is also highlighted by the fact it has little or no exposure to India, compared with 12.1% for the Man fund. In contrast, the Federated Hermes fund has more exposure to China (38.4% versus 25.0%).

The Man fund is the also more concentrated of the two, with about half the number of holdings of the Federated Hermes strategy.

Fund characteristics

Sector allocation:

Federated Hermes	weighting	Man Group	weighting
IT	26.1%	IT	43.7%
Consumer discretionary	17.1%	Financials	18.0%
Financials	15.1%	Industrials	14.0%
Communication services	11.3%	Consumer discretionary	8.1%
Consumer staples	10.7%	Communication services	7.5%
Industrials	10.5%	Materials	3.5%
Materials	5.5%	Healthcare	3.4%
Real estate	2.5%
Energy	0.9%

Country allocation:

Federated Hermes	weighting	Man Group	weighting
China	38.4%	Taiwan	29.2%
Korea	28.9%	China	25.0%
Taiwan	12.8%	Korea	24.4%
Thailand	8.8%	India	12.3%
Hong Kong	3.0%	Philippines	2.6%
Japan	2.6%	Hong Kong	1.7%
Switzerland	2.1%	Indonesia	1.6%
Indonesia	1.4%	Australia	1.5%
Philippines	1.1%
US	0.7%

Top 10 Holdings:

Federated Hermes	weighting	Man Group	weighting
TSMC	9.9%	TSMC	9.4%
Samsung Electronics	9.6%	SK Hynix	9.3%
Tencent	7.1%	Samsung Electronics	9.2%
Samsung Life Insurance	4.3%	Tencent	5.0%
Samsung Fire & Marine	3.8%	ASE Industrial	3.7%
AAC Technologies	3.6%	Alibaba	3.3%
CP All	3.5%	Delta Electronics	3.3%
JD.Com	3.2%	Hon Hai Precision	2.9%
Contemporary Amporex Technology	3.1%	ICICI Bank	28%
Bangkok Bank	2.8%	Taishin Financial	2.7%

Performance

“One would probably expect the Man fund to perform better in a technology, AI-led and growth market, while the Federated Hermes fund should excel when there are recoveries in China, banking, property and other previously depressed sectors,” McDermott said.

Over five years both strategies have performed “reasonably well”. Man Asia (ex Japan) Equity and Federated Hermes Asia ex-Japan Equity both had their worst year in 2022, while both also had strong years in 2025.

The Federated Hermes fund has generated a three-year cumulative return of 72.6% with annualised volatility of 17.63%. The Man strategy has achieved 76.92% during the same period, with annualised volatility of 18.52%, according to FE fundinfo.

The Man Asia (ex Japan) fund has outperformed year-to-date (20 July 2026), up 18.16%, compared with the Federated Hermes Asia ex-Japan Equity fund, which is up 14.15, FE fundinfo date shows.

Manager review

“Both strategies have strong teams in this region,” said McDermott.

Jonathan Pines is a highly experienced manager and has spent well over a decade working on this fund. He joined the firm in March 2009 as a portfolio manager for the Asia ex-Japan strategy, becoming its lead manager in early 2010. Before this, he was a fund manager at RAB Capital and an analyst at Orbis Investment Advisory in London. Originally from South Africa, Pines was a partner at PKF Johannesburg. He holds an MBA from Harvard Business School, is a CFA charterholder, and a chartered accountant.

Andrew Swan is head of Asian equities at Man Group and is based in Australia. Swan began his career as a research analyst at Ord Minnett Securities in 1994. He was a portfolio manager at JP Morgan between 2005 and 2011 before he joined BlackRock as head of fundamental Asian equities and head of fundamental Emerging Markets. He joined Man Group in August 2020. Swan holds a Bachelor of Commerce from the University of New South Wales.

Fees

According to Morningstar studies, fees are the best predictor of a fund’s future success, and an investor should select the cheaper fund, all else being equal.

The on-going charges figure (OCF) for the Federated Hermes fund share class available to Asian retail investors is 1.6% and the OCF is slightly higher for the Man fund at 1.96%, according to FE fundinfo.

Conclusion

McDermott likes both funds. “They are high conviction and have a style tilt which means they can complement one another,” he said.

“We like the Man fund’s conviction and flexibility. The portfolio also strikes the right balance between manager freedom and risk control. The process of focusing on relative earnings revisions has proven to be successful since launch. Many investors will gravitate towards the growth focus, particularly as technology flourishes in the region.”

“However, the contrarian philosophy of the Federated Hermes fund makes it refreshingly different to many of its peers,” McDermott said. “The process has historically worked very well, with the fund delivering excellent long-term performance and an ability to offer cover when markets shift.”