To “revamp AXJ” would mean to improve or modernize an investment strategy focused on Asian countries, excluding Japan.
Here is a guide to revamping an Asia ex-Japan (AXJ) investment strategy.
Revamping an Asia ex-Japan (AXJ) investment strategy
1. Re-evaluate your goals
- Define your objective. Are you looking for a higher-growth emerging market strategy or a more diversified and balanced regional portfolio?
- Review market relevance. The AXJ model is considered obsolete by some experts who argue that it’s no longer a useful framework for modern business and economic analysis, as China’s markets have grown significantly. Consider if this traditional approach still aligns with your investment philosophy.
2. Refresh your investment thesis
- Update your market analysis. Conduct a new strategic analysis, including an updated SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the region. The economic and geopolitical landscape of Asia evolves rapidly.
- Identify new growth drivers. Asia is no longer just a source of emerging markets. Look at new trends such as the growth of the middle class, the rise of financial technology, and increased intra-regional trade.
- Assess your investment universe. Review the countries and companies within your AXJ portfolio. Is your current asset mix still relevant, or should you focus on different sectors or sub-regions?
3. Update your processes and tools
- Leverage new technologies. Integrate modern investment tools and project management software to monitor progress and track key performance indicators (KPIs).
- Incorporate new metrics. Consider adding ESG (Environmental, Social, and Governance) factors to your analysis. Some AXJ-tracking indexes already provide ESG data.
- Streamline communication. Establish clear and regular communication channels with your team and any stakeholders involved in the investment process. This helps ensure that new strategy changes are implemented effectively.
4. Address specific areas for improvement
- Analyze past performance. Look at what has and has not worked in your previous AXJ strategy. Were projects delayed? Did you miss targets? Use this feedback to identify weaknesses in your approach.
- Manage risks. Proactively identify and plan for risks and other uncertainties. A robust risk management plan helps to protect your investments and is a crucial part of any revamp.
- Rebalance your portfolio. Based on your new analysis, adjust your portfolio’s allocation. This might involve changing your mix of stocks and bonds or focusing more on value-oriented securities.