No portfolio manager, regardless of skill or track record, gets every call right, notes Morningstar analysts Claire Liang, Arvind Subramanian and Sam Hui in a May 27 report. In an environment where the macro backdrop is constantly shifting and dislocations are frequent, investors need more than just good ideas – they need decisive judgement and the ability to learn from past mistakes.
In this report, the analysts spoke to seasoned investors at asset managers – Fidelity, FSSA, Pimco, and Schroders – who have consistently delivered strong returns. Here, their insights highlight how introspection and strategic agility help sustain outperformance.
Invest with a contrarian mind but don't ignore the consensus: Fidelity
Anthony Srom, investment analyst at Fidelity and seasoned Asia equity investor, believes in looking at companies that are under pressure due to short-term headwinds, but only if their fundamentals and market structure support a recovery. Srom, who led the Fidelity Asia Pacific Opportunities strategy since June 2014, uses negative market sentiment to generate ideas and aims to invest in quality stocks that the market tends to overlook.
A textbook case of his contrarian mindset was his early 2020 investment in fibre cement producer James Hardie Industries during the Covid-driven selloff. Srom saw beyond the declines in construction activity and, instead, bet on a US renovation rebound. His position became one of the fund’s top contributors through April this year.
See also: US-China trade truce: Reprieve or realignment?
Srom bought James Hardie at roughly 3% portfolio position when its share price was at A$18.50 ($15.44). By the end of April 2025, the stock’s share price soared by 100% since its initial purchase / Chart: Morningstar
But even seasoned contrarians stumble sometimes. His conviction in Beijing Oriental Yuhong, a Chinese building materials firm, ran up against the structural headwinds of a prolonged property slump. Despite initial signs of resilience and macro-level policy support, the company’s stock sank over 70% before Srom exited in 2024. He later admitted to holding on the stock for too long, underscoring the need to pair contrarian bets with time-bound conviction and flexible thinking.
See also: Beyond the trade truce: Why Chinese stocks deserve a nuanced approach
Caption: Beijing Oriental Yuhong’s stock sank over 70% before Srom exited in 2024 / Chart: Morningstar
Take a long-term view on equties but remain vigilant about structural changes: FSSA
FSSA’s co-managing partner and investment team leader, Martin Lau, is known for his commitment to quality growth investing and unusually long holding periods. His Asian Equity Plus strategy has outperformed across cycles by backing durable franchises with capable management and strong balance sheets.
His position in Midea Group – initiated in 2017 – is emblematic of this. Despite macro pressures, including rising input costs and China’s real estate drag, Lau stuck with the firm, citing its pricing power and overseas growth. He also believed that the management’s focus on upgrading its product portfolio would put it in a good position for market share gains. The stock rewarded his patience with a 120% gain by April, initially meeting multiple headwinds, which led the stock to plunge almost 60% from its peak since purchase.
As of the end of April 2025, the stock soared nearly 120% during Lau’s holding period and featured among the top contributors to his Asian equity portfolio over the past decade / Chart: Morningstar
But a long-term bias can turn costly if structural disruptions are underestimated. Lau’s investment in LG Household & Healthcare – once a top performer – turned into a notable detractor as China’s beauty market stalled.
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Increased competition, poor branding investment, and overreliance on daigou sales exposed flaws in the company’s resilience. Lau acknowledged that he misjudged industry changes and underestimated increased competition. These miscalculations highlight the value of a post-mortem culture on even minor positions. Lau exited this position in December 2023.
LG Household & Healthcare’s share price declined more than 70% from its peak in a two-year period as it faced a slump in the Chinese cosmetics market / Chart: Morningstar
Take advantage of market opportunities while maintaining focus on risk management: Pimco
For fixed-income titan Pimco, navigating the complex dynamics of Asian credit requires more than duration calls. Stephen Chang, managing director and portfolio manager at Pimco, blends macro inputs with bottom-up credit analysis to find yield in volatile environments. Chang has led the Pimco GIS Asia High Yield Bond Fund since February 2019.
In early 2023, Chang misread the deterioration of Country Garden, a top-10 Chinese property developer, initially viewing it as a potential survivor amid the sector downturn due to its sufficient liquidity and progressing property sale revenues.
Despite signals of financial stress, Pimco underestimated the pace of sales decline and the government’s reluctance to provide deep systemic support. The fund's exposure – 2.3% in June 2023 – ended up as a significant performance drag after the developer defaulted later that year.
Pimco GIS Asia High Yield Bond still held approximately 2.3% in Country Garden as of June 2023, just before the major selloff in the bond’s prices, which contributed to the fund’s approximately 350 basis points of underperformance linked to Chinese property exposure in 2023 / Chart: Morningstar.
The team responded by tightening their credit watch system, adopting a “traffic light” framework to flag at-risk credits earlier. Chang applied a more cautious approach to the broader Chinese property sector and utilised the fund’s flexibility to invest up to 20% of the portfolio in off-benchmark assets, which proved useful in turbulent years. They applied the same mindset through tactical allocations to US Treasuries and off-benchmark names, cushioning broader losses.
Right-size bets to manage risks: Schroders
Keiko Kondo, who oversees Schroders’ Asia multi-asset strategies, prefers a holistic approach when investing across a broad range of asset classes. That pragmatism helped her funds steer through 2022’s selloff and capture the AI-driven US rally in 2024.
In 2022, she slashed equity exposure and doubled cash holdings to shield her portfolios from geopolitical and rate-driven volatility. Then, as inflation data stabilised and tech momentum built, she rotated into U.S. equities and semiconductors, including a targeted position in S&P 500 futures and a US semiconductor ETF – adding significant alpha.
Kondo’s decision to raise cash from 10% to 20% and trim equities from 60% to 50% in 2022 positioned the portfolio to brace for the Russia-Ukraine war and aggressive rate hiking / Photo: Morningstar
Her efforts to capture China’s reopening rally were less fruitful. Tactical long positions via China equity index futures fizzled as sentiment turned repeatedly. Rather than double down, Kondo trimmed risk, reducing China trades to 1%-2% weightings and exiting them quickly when rebounds faltered.
She attributed her blunder to the more sentiment-driven Chinese market, which makes it harder to “get the timing right”. However, it is this nimbleness in decision making and adjusting positions during market turns that would help control risks.
