IN THE past couple of years, Wong Kok Hoi, chairman and chief investment officer of APS Asset Management, has been quoted in the media frequently for his comments on the investment performance or strategies of the Government of Singapore Investment Corp (GIC) and Temasek Holdings.

Now, after shaking off a few years of under-performance, he is ready to talk about his own fund management firm. And some of his funds, it seems, have roared back with a vengeance.

In the 12 months to January, the APS Far East ex-Japan equity fund chalked up a gain of 111.2 per cent, beating the index by a whopping 42.5 percentage points.

The APS Far East Free Equity fund advanced 71.3 per cent, outpacing the index by 38.7 percentage points.

And its Absolute Return Funds registered a gain of 103.2 per cent, compared with a 17.9 per cent gain by the Hedge Fund Index.

Finally, the star product - the APS China Alpha Fund - was up 90.4 per cent in the year to January 2010, thumping the hurdle rate of 8 per cent more than 10 times over.

The only fund that had a 'mediocre' year was the APS Japan Growth Fund, which outperformed the market index by a mere four percentage points, with an absolute gain of 16.4 per cent in the past year.

Last week, APS' Asia-Pacific Hedge Fund was voted the best-performing new hedge fund by Hedge Funds World. And its China fund has collected the 'Best-of-Best' China Fund Award from Asia Asset Management for three years in a row.

At its peak a few years back, APS had US$3.7 billion of assets under management (AUM). But this deluge was, perhaps, a case of too much too soon. 'In the initial years it was so difficult to attract funds. But as we built up our track record, the funds came flooding in. And we just accepted everything,' Mr Wong told BT.

The distraction of having to manage several funds, and the stress of coping with expansion, affected performance. According to Morningstar data, APS Alpha, which invests in Asia-Pacific ex-Japan equities, has the worst five-year record among its peers. Consequently, AUM has declined to about US$1.7 billion today.

Now, Mr Wong thinks APS has got its focus back, and its team together. APS, just like any financial institution, is ever-ready to pay for performance and talent, he said. Last year, its top three fund managers earned between US$1 million and US$2 million.

Asked to attribute the splendid performance of his China fund, Mr Wong put it down to three things:

One, loading the portfolio with both value and cyclical stocks at the start of the year when valuations declined to levels not seen for over a decade;

Two, resisting the urge to take profit when the market rose 50 per cent in three months from March 2009;

Three, buying high-yield convertible bonds (CBs) from the fourth quarter of 2008, and accelerating purchases in the first half of 2009.

'We bought Hi-P in Singapore, Xinyi Glass in Hong Kong and KH Vatec which declined to three times earnings,' Mr Wong said. 'There was tremendous value in the first quarter of last year, but obviously you needed lots of guts to buy stocks when others were dumping them.'

As for CBs, APS bought those issued by Yanlord, Olam, Powerchip, Taiwan High Speed Rail, First Gen, Hynix and others. 'None of our CBs defaulted,' he said.

'Nine out of 10 decisions we made in 2009 turned out to be good ones. But many of the decisions were very counter-intuitive to consensus company and economic forecasts.'

For this year, Mr Wong says APS still thinks stocks are attractive compared with other asset classes. 'Bond yields are too low when the risk of issuers has increased substantially,' he said.

'Property rental yields are also very low worldwide. Private equity is suffering from the excesses of the 1990s and most of 2000s. Gold, which earns no income, is selling at US$1,100. This shows there are not many quality assets for investors to put their money into. I can say with confidence that stocks look attractive in this environment.'

APS still likes KH Vatec and Hi-P. It also likes Hon Hai and China Fishery. Among CBs, it likes Lion Diversified.

On China, Mr Wong doesn't think there is an asset bubble now. China's State Council deserves a medal for policymaking in the past 10 years, he reckons.

For example, the recent monetary tightening is appropriate as a pre- emptive strike against bubble formation. 'I expect prices to correct 10 to 20 per cent, but I don't expect a collapse for four reasons,' he said.

One, there is still plenty of latent demand for homes because China's home ownership rate is still relatively new. Many young families in cities have yet to buy a home.

Two, wages are still rising in China, so what is unaffordable today will become affordable in three to four years.

Three, the bulk of savings are still locked up in bank deposits earning miserable interest rates. 'So if property prices were to decline 20 per cent, I would expect a portion of this savings to move to the property market.'

Finally, even if prices were to decline 30 per cent, the majority of home-owners would not walk away from their mortgage obligations, as happened in the US, because they still have positive equity in their homes.

In such a scenario, Shanghai- based banks would see their non-performing loans rise to 2 per cent and their profits impacted by 7 per cent. In contrast, when property prices crashed in Japan in the early 1990s, the Japanese banks went into technical bankruptcy.

'In this regard, Chinese banks are more blessed than their Western counterparts because Chinese don't believe in 80 per cent mortgages,' said Mr Wong.