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 (Bloomberg) -- A top-performing Morgan Stanley fund is betting on cash-rich consumption-focused stocks in Asia, especially China, to manage risks in market cycles this year.Sign up for Next China, a weekly email on where the nation stands now and where it's going next.The Wall Street firm's Asia Opportunity Fund, which focuses on equities in the region excluding Japan, returned 44% in the past year, beating 99% of its peers, according to data compiled by Bloomberg. The portfolio focuses on undervalued companies with low debt or net cash on their balance sheets, many of which are found in consumer sectors, said Kristian Heugh, who has been co-managing the fund since its inception in 2016."We seek to protect investors' capital by focusing on high quality companies with sustainable competitive advantages and purchasing them at a discount to our estimate of intrinsic value," Heugh said. "We remain vigilant in selling names approaching our estimate of their intrinsic value and redeploying that capital in what we believe are the next big ideas."China is the $1.5 billion fund's largest-weighted country, accounting for 57.7% of assets as of end-December. Heugh said the world's second-largest economy will remain a key focus this year despite its slower growth in 2019.Asian consumer stocks provide "high returns on capital, low leverage and quality growth prospects," Hong Kong-based Heugh said. The region offers "the highest ratio" of high-quality companies that have generated both 15% return on invested capital and 1
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