Rising interest rates and China’s unexpectedly difficult recovery from Covid are among the headwinds emerging markets have faced of late. However, the outlook for the asset class looks brighter in 2024 should interest rates plateau or fall leading to a weaker US dollar.

One savvy way to capture the opportunities across Asia, a vast region with favourable demographics, and hopefully profit from a strong re-rating, is through JPMorgan Asia Growth & Income (JAGI) which is currently at 52-week lows.

Shares believes a 9.7% discount to NAV (net asset value) presents a compelling entry point for a fund which has generated 10-year annualised total returns of 8.6%, well ahead of the 5.7% return for Morningstar’s Asia ex-Japan Equity category.

Managed by Ayaz Ebrahim and Robert Lloyd, a valuation-conscious duo able to leverage JP Morgan’s deeply-resourced research platform, the trust has the second-best 10-year share price total return in the AIC’s (Association of Investment Companies) Asia Pacific Equity Income sector, with a 125% haul, and the sector’s lowest ongoing charges at 0.69%.

‘The key differentiation with some of the other Asian funds is the income element,’ explains Ebrahim. A prospective dividend yield of 4.8% should limit downside from these levels and the payment of quarterly dividends equivalent to 1% of NAV should appeal to regular income seekers. ‘You are getting capital growth over the longer term, but you still get an income stream within that,’ says Ebrahim, although he stresses they are not simply buying high-yielding stocks.

Using an integrated ESG approach, the core of the portfolio centres around what Ebrahim calls ‘fundamentally sound’ cash-generative companies which can create shareholder value ‘over multiple years’.

The portfolio offers exposure to high-quality corporates in China and India as well as Indonesia, Taiwan, Korea and others, while the biggest sector allocations are to information technology, financials and consumer discretionary. Top 10 holdings as at 31 October 2023 included Taiwanese firm TSMC (TPE: 2330), number-one chipmaker for the likes of Nvidia (NVDA:NASDAQ) and Apple (AAPL:NASDAQ), along with Chinese multimedia colossus Tencent (HKG:0700) and Korean electronics giant Samsung (005930:KRX).

JAGI also offers exposure to the hot returns on offer in India through the likes of Mumbai-headquartered HDFC Bank (HDFCBANK:NSE), Infosys Technologies (INFY:NSE), the second largest Indian IT company after Tata Consultancy (TCS:NSE), as well as Maruti Suzuki (MARUTI:NSE), the Indian subsidiary of Japanese automaker Suzuki Motor Corporation.

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