Schroders has outlined the new year strategy for its sector-topping Asian Alpha fund under the management of Matthew Dobbs.

The fund was the top performer over the past 12 months in the Asia Pacific (ex Japan) IMA sector and would have returned £1,702 on an initial investment of £1,000 over on year to 31 December 2009.

In an exclusive interview with What Investment.co.uk, fund manager Matthew Dobbs, explained how the portfolio is now slightly more defensive than it was in the summer.

He said, ‘If we continue to have very relaxed monetary policy globally, Asia is likely to maintain health liquidity.  Risks for Asia are external.  If global activity has hit the buffers, then Asia will suffer as it has quite an export-orientated market.

‘In that environment, it will be a traditional slowdown.  The bottom falling out of the market is less likely.  Asia has shown that it is in pretty good shape.  Most of the countries reacted by cutting interest rates or introducing significant fiscal stimulus, which they could well afford.’

Dobbs explained that he will be looking at a number of macro indicators over the coming 12 months before he makes buying decisions in specific regions.

‘I will be watching US interest rates.  They are likely to remain quiescent for a while, but US rates going up will still create a headwind for Asian markets. Indonesian politics is stable after the elections last year,’ he added. 

‘In China, some of the money in the economy has spilled over to some speculation in the Beijing property markets, although, having said that, it is more likely a problem for 2011 and 2012.’

Subscribers to What Investment can read a full survey on the Asia Pacific sectors (including and excluding Japan) with exclusive interviews with the best and worst performing fund managers in the February issue, out 30 January 2010.