6 APAC Investment Opportunities to Watch from Q2 2026

Morningstar’s Manager Research analysts in Asia cover a wide range of managed strategies, combining ongoing qualitative coverage with regular discovery meetings. Each quarter, we share a snapshot of the strategies that have caught our attention. 

For our second-quarter 2026 report, we highlight some tech-focused equity funds, including those with exposure to artificial intelligence-related companies, as well as income-generating allocation strategies, a perennial favorite among Asian investors. 

The strategy is led by Yash Patodia, who brings relevant experience but is still building his first public track record as a sole decision-maker. Patodia has 18 years of experience and assumed sole leadership of the strategy in January 2023 after comanaging it since October 2020, previously contributing as a tech analyst since joining Wellington in 2014. He is directly supported by three Asia-dedicated analysts from the firm’s well-resourced technology sector global industry analyst team, which he has co-led since 2024. 

The fund’s bottom-up approach targets the next generation of market leaders, defined as companies with strong products, large addressable markets, and management teams with sensible strategies that invest and execute effectively. This focus is sound in principle, though execution is heavily reliant on manager discretion, raising concerns about key-person risk and repeatability. Patodia has favored semiconductor companies like TSMC and Tokyo Electron, along with US firms Nvidia and Broadcom, for their role in the AI supply chain, while allocating to Softbank for its investment in OpenAI and Alibaba for its growing hyperscaling business. The strategy’s Asia focus differentiates it from most peers and the category benchmark, Morningstar Global Technology Index. This weighed on relative performance over Patodia’s tenure through May 2026 as US tech stocks led the market. 

The strategy is co-led by Stephen Chow and Kevin You, supported by eight experienced China analysts. Both Chow and You bring around 20 years of experience. Chow succeeded former co-lead manager Jason Hsu in June 2023 and brings extensive expertise in technology. You joined the roster in June 2025, following former co-lead Marco Yau’s departure, and contributes strong expertise in industrials. While the duo’s complementary skill sets support the strategy’s key focus areas, they have only comanaged the fund for about a year. Team stability is another watchpoint. 

The duo focuses on companies with structural growth potential benefiting from policy support, visionary management, and reasonable valuations. Innovation impact is a key, with a preference for companies exhibiting R&D intensity above 5% of revenue, or rising R&D spending. This has led to a structural bias toward technology and industrials, which combined have averaged over 50% of the portfolio since inception, compared with the prospectus benchmark MSCI China All Share’s 20%. The managers found recent success in optical module suppliers that facilitate data communications between AI processors like Zhongji Innolight. Results were strong over Chow’s tenure, though the strategy’s concentrated positioning could result in higher volatility and periods of underperformance when market leadership rotates away from its primary exposures. 

By design, the index represents a narrow subset of the global opportunity set available to the ETF’s category peers, and typically all constituents are Chinese companies. Driven by index construction guidelines and the Hang Seng Industry Classification System, the portfolio also holds companies beyond the IT sector like Meituan, and its consumer discretionary exposure climbed from 25% at ETF launch to 40% as of May 2026. The ETF fully replicates the index in practice, which should help minimize tracking error and is sensible considering it holds just 30 constituents. The fund is managed by iShares’ experienced Asia-Pacific ex-Japan team, which is backed by comprehensive firm-wide resources and sophisticated infrastructure. Tracking performance since the ETF's launch has been tight, with an annualized tracking difference roughly in line with its total expense ratio and an annualized tracking error of 7 basis points from October 2020 through May 2026. However, the ETF severely lagged its category benchmark and peers over the period due to the underperformance of China consumer stocks, lack of US tech exposure, and limited representation of AI hardware names. 

The strategy is led by Eunice Hong, who has the final decision-making power for the strategy. She is closely supported by comanager Julie Lee, and both managers are based in Singapore. Team leader SooHai Lim is also a named manager but takes more of a back seat. Hong has a long tenure in the asset class, covering Korean equities for around 20 years. She joined Barings in 2007 and was appointed comanager of this fund in mid-2018, leading up to its former lead manager’s retirement in January 2019. Lee joined the firm in mid-2021 and was appointed comanager in February 2024. 

Hong prioritizes high earnings growth potential, and while quality is also considered via franchise, management, and balance-sheet pillars, it may be deprioritized if a company exhibits a robust growth outlook. As such, the portfolio’s price metrics have typically been slightly above the prospectus benchmark MSCI Korea Index over Hong’s tenure. As a UCITS fund, the portfolio is subject to a 10% cap on individual stock positions. This forced Hong to underweight Samsung Electronics and SK Hynix, which have immensely benefited amid the AI frenzy and increasingly dominated the MSCI Korea Index, putting the fund at a disadvantage despite Hong finding some success in AI hardware enablers like Samsung Electromechanics and SK Square. 

Wellington’s co-head of multi-asset solutions, Stephen Gorman, has been at the helm since the fund’s restructuring in May 2025. Gorman is a veteran multi-asset investor with 35 years of experience, including nearly two decades at the firm. He works closely with Clara Cheong in managing this portfolio. While Cheong brings 15 years of industry experience, she is a recent addition to Wellington, having joined in the third quarter of 2025. They are backed by a robust 15-member multi-asset solutions team, which features several highly experienced, long-tenured professionals. 

Gorman leverages multiple income streams, with US covered-call option writing at its core. It is the fund’s primary source of income and can add value when the underlying stock is down or trades sideways, though it also limits upside participation. These options are also sold on individual stocks, which involves idiosyncratic risk. This is complemented by an ex-US high-dividend equity mandate. The fixed-income allocation comprises a dedicated high-yield component and an active multisector income strategy. To enhance diversification and smooth returns, Gorman also incorporates liquid alternatives, such as an equity market-neutral strategy. Meanwhile, asset allocations are actively managed to navigate shifting market environments. Overall, while this setup benefits from diversified income and alpha sources, it is too early to conclude its strength over a full market cycle. 

Lead manager Kelly Chung has managed the strategy since its 2017 inception, building a strong long-term track record. Chung joined Value Partners in 2016 and brings 25 years of industry experience. She heads a compact three-member multi-asset team and leverages the firm's broader equity and fixed-income teams for research support, though she retains the ultimate decision-making authority. While Value Partners' underlying equity team is reasonably sized and experienced, it has suffered from heightened turnover in recent years. The fixed-income team, meanwhile, is relatively small compared with peers in Asia.  

Chung manages the portfolio's asset allocation dynamically, historically shifting equity exposure between 30% and 70% and fixed-income exposure between 20% and 50%. While cash can rise to 20% for defensive or risk-management purposes—as it did in 2022 amid aggressive monetary policy tightening—it typically remains below 10%. The equity sleeve is anchored in dividend stocks, with flexibility to invest in growth-oriented companies where Chung identifies attractive total return opportunities. This includes a notable exposure to Taiwanese and South Korean technology companies, which was increased throughout 2025 as Chung bet on the secular AI theme. Meanwhile, roughly half the fixed-income exposure is in Asian high-yield debt, supporting portfolio yield.