Silkkitie Fund

JOM Silkkitie Investment Fund is an actively managed equity fund that invests in publicly listed small and midcap companies mainly in East and Southeast Asia, e.g. Indonesia, the Philippines, China and Vietnam. The Fund was launched on July 31, 2009 and it is registered in Finland.

2011-8,11%-1,34%+2,81%+3,17%-2,47%-0,62% +7,75% -10,15% -14,07% +5,83% -4,11% +4,73%-17,59%

Investment themes in Asia

What are the main growth drivers of Asian economies?

One of the most important factors that determine economy’s long-term growth potential is the working age population growth. Thus, growing working age population consumes more, requires functional infrastructure and uses more services. Demographic factors, however, determine for how long working age population is growing. For example, if large proportion of population is younger than 30 years old, the longer the working age will keep on growing, thus making growth structurally sound and healthy. In table below illustrates different Asian countries working age population growth for the period 2015-2020.

CountryPopulation 2012 (million of people)Working age population growth 2015-2020 %Working age population growth 2015-2020 in absolute terms
Philippines9810 %9,8 milj.
Malaysia308,5 %2,6 milj.
Vietnam8911 %9,8 milj.
India12107,2 %87,1 milj.
Indonesia2455,8 %14,2 milj.
Thailand661,2 %0,8 milj
Singapore50,1 %0,0 milj
China1355-0,8 %-1,4 milj
Korea50-2 %-1 milj
Taiwan23-2,4 %-0,2 milj
Japan127-4 %-5,1 milj

Labor costs

In South-East Asia labor costs are considerably lower compared to North-Asian countries such as Korea, Taiwan, Japan and China. Thus, FDI (Foreign Direct Investment) flow towards SE-Asia is naturally increasing at healthy pace as new factories are being set up in low-labor cost countries. In addition, a young and growing middle income class is also attracting FDI as companies wish to be closer to the customer.



Infrastructure investments in Asia have been growing steadily but there are large differences between different countries. For example, in North-Asian countries such as Japan, Korea and Taiwan infrastructure is already relatively advanced and infrastructure investment growth rates have slowed down. However, in our focus countries (Indonesia, the Philippines, Vietnam and India) infrastructure needs are very large and long-term in nature. Only in ASEAN countries infra-investments are projected to grow by 12% annually until 2025 – major part of this growth is going to happen in Indonesia due to the fact that after the late 1990s Asian financial crises, Indonesia focused mainly on improving its balance sheet and paying back debt. Thailand, meanwhile, after the Asian financial crises, focused heavily on building infrastructure in order to grow its way out of the crises. Therefore Indonesia’s state of infrastructure is now lagging other parts of SE-Asia.

Cement consumption is the key factor to follow in order to know where in the structural growth phase we are. Still a long way to go before the strongest phase slows down.


Structural growth

The first decade of this millennium was characterized by strong global growth, but especially in the western countries this growth was created largely by debt. Now, as we are in the latter part of the second decade of this millennium, global growth rates have decelerated markedly as debt levels reached their peak in the western world while interest expenses are eating away most of the growth. However, in our focus countries in SE-Asia, population is mostly very young, structural growth drivers of the economies are set to create growth irrespective of global demand situation and debt levels are relatively low – thus growth rates have remained relatively stable. We think that countries with large and young population will continue to post healthy growth rates in the foreseeable future.













ASEAN information

Members are Indonesia, Thailand, the Philippines, Malaysia, Singapore, Vietnam, Myanmar, Cambodia, Laos and Brunei.
• If ASEAN was one country, it would be the 7th largest economy globally.
• There are more than 660 million people in ASEAN, that is considerably more than in the EU or the US.
• ASEAN labor force is growing annually by 1.6% or by 8.4 million people.
• By far the largest ASEAN member economy is Indonesia , with around 36% share.

Fund investment strategy

Strategic allocation

We aim to focus on themes and industries that are in the structural growth phase in our focus markets in Asia. Straightforward examples of structural growth themes are low car penetration, low banking penetration or underdeveloped infrastructure. In addition, we also focus on economies, where labor force growth is in long-term trajectory or in other words where more than 50% of population is younger than 30 year of age.

We aim to have 3-5 different structural growth themes in the portfolio, but within these themes, we may have more focused/niche themes. For example, in growing middle-class theme you may find various niche growth themes, depending on which part of the development cycle corresponding country is going through. Naturally, structural niche growth themes can also be found in more straightforward infrastructure theme.

Changes in countries’ structural growth themes also create interesting opportunities. For example, China’s economic growth is now shifting more into services oriented growth from construction and investment led growth that we experienced until 2011. This shift, while it can be painful and volatile, creates also opportunities for investors.

From the most potential structural growth themes we choose 2-6 stocks into the portfolio. Historically, we have had 20-41 stocks in the portfolio.

Tactical allocation between different countries depends on macro factors, equity valuation levels and political situation in the focus countries. We put the most emphasis on politics when determining country weights in the portfolio.

Company specific factors that JOM Fund Management is focusing include:

  • Valuation level of the company should be low compared to its competitors.
  • Company is able to grow its revenue mostly organically and in a controlled manner without taking extra-large risks. Especially, growing by taking debt should be very well controlled. In addition, company should improve its profitability in the medium-term.
  • As free float levels are very often below 50% in our focus markets, it is extremely important that main owner’s (family, company etc) interests are aligned with other shareholders.
  • Company has within the structural growth area that it is operating in, its own “niche” theme, where company is a leader and can use its position to gain more market share.

Fund investment objective

Fund’s objective is to markedly overperform the MSCI Asia (ex-Japan) Index in euros within 1-2 years.

Fund rules


Jom Introduction


KIID document




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