Aberdeen Asia Pacific Equity Fund returned 1,415% from its inception 1988 through the end of May, beating its benchmark index by about 417%.
However, for the past three years, the fund returned just 1.7%, trailing 14% gain in the MSCI Asia Pacific ex Japan Index and lagging behind more than 90% of peers tracked by Bloomberg.
The flagship fund dropped 67% from their peak amid a stretch of weak returns.
What went wrong? Heavy weighting in Southeast Asia, which had been struggling amid rising US interest rates and the aversion to the governance practices at Chinese Internet companies such as Alibaba Group Holding Ltd.
Hugh Young, co-founder of Aberdeen Asset Management, now known as Standard Life Aberdeen in Asia, after merger, is still a strong believer in active management despite the rise of passive index.
Reason? “Logically, if you’re investing in something, do you just buy because it’s big?”