Jefferies says 2025 Asia ex-Japan long-only portfolio hit by high India stock exposure

Jefferies in its latest GREED & Fear note said while the long-term performance of its Asia ex-Japan long-only portfolio remains satisfactory, it was hit last year by India's by worst-relative performance in an Asian context since 1995.

Jefferies said its Asia ex-Japan long-only portfolio declined 3.7 per cent last quarter on a total-return basis, compared with a 4.3 per cent gain in the MSCI AC Asia ex-Japan Index. "It also underperformed last year rising by 14.3 per cent compared with a 33 per cent gain in the benchmark. This is its worst annual relative performance since inception," it said.

Jefferies said the portfolio suffered last year from its longstanding high exposure to India. The portfolio ended last year 36 per cent invested in India, though down from a peak of 50 per cent in mid-February 2024, and 35 per cent invested in China. 

"The portfolio’s Indian stocks declined by an average of 2.4 per cent in US dollar terms last year, while the portfolio’s Chinese stocks rose by an average of 23 per cent. It should be noted again that the stated performance of the absolute-return portfolio is on a total-return basis," Jefferies said.

Jefferies said the other issue for the portfolio last year was the minimal exposure to Korea. "The irony is that in GREED & fear’s Asia Pacific ex-Japan relative-return portfolio, which is run more tactically, GREED & fear has had an average weighting in India of only about two percentage points above the benchmark last year," it said.

Since its inception at the end of 3Q 2002, Jefferies' Asia ex-Japan long-only portfolio has risen on a total-return basis by 4,198 per cent in US-dollar terms, compared with an 874 per cent increase in the MSCI AC Asia ex-Japan Index and a 1,209 per cent increase in the S&P500 index. 

"This means the portfolio has risen by an annualised 17.6 per cent since inception, compared with an annualised 10.3 per cent increase in the MSCI AC Asia ex-Japan Index and an annualised 11.7 per cent gain in the S&P500," Jefferies said.