Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Aberdeen Standard Asia Focus. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
Aberdeen Standard Asia Focus (AAS), formerly Aberdeen Asian Smaller Companies, aims to generate long-term capital growth by investing in high-quality Asian smaller companies. The management team has a valuation-sensitive approach and aims to hold companies for the long run.
Relative performance has been strong over the past year, with the trust outperforming the MSCI AC Asia Pacific ex-Japan Small Cap index by 5%, although shareholders have made almost twice that thanks to the narrowing discount. The trust lost much less than the market during the slump in the fourth quarter of 2018, with the defensive qualities of its portfolio having the expected effect. It also gained more than the market during the May and June 2019 rally thanks to its large overweight to India, which led Asian markets following Prime Minister Narendra Modi’s emphatic election victory.
Hugh Young, one of the most experienced fund managers in the Asian market, was named lead manager in November last year as part of an overhaul requested by the board. He has cut the number of holdings and increased the concentration in the highest-conviction ideas in order to increase the potential for outperformance. The strategy, however, remains the same. The focus is on identifying companies with high-quality financials and management, and buying in at attractive valuations and holding for the long run.
The approach is highly active, with some significant over and underweights in terms of country, sector and holding. For example, the trust has long been underweight China, largely due to corporate governance concerns. On the other hand, its overweight to India is a multi-year feature and likely to remain. The manager’s judicious use of increasing gearing into the fourth quarter of last year has also helped performance.
The discount has responded somewhat to the overhaul and the improving performance, with the average for 2019 being 11.7% compared to 14% for 2018. However, it still trades 11.5% below par at the time of writing.
The trust yields 1.5% and, while this is not high, the track record of dividend growth is strong, with 6.8% compound growth per annum achieved over the past five years. In fact, the trust has managed to grow or maintain its dividend in each year since launch in 1995 – excluding 1997 and 1998 – and investors at launch would now be earning a 17p dividend on their initial investment of 100p, representing a compound growth of around 7%.
This report has been issued by Kepler Partners LLP. The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.
Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.
Kepler Partners is not authorised to market products or make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.
The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.
Fund History: Aberdeen Standard Asia Focus
The natural resources sector is changing: investors may want to rethink their long-held views..
Investment trusts are particularly suited to multi-asset strategies. Our research identifies the leaders in this increasingly popular field...
The US market continues to confound many skeptics. It has pushed ahead of other global stock markets, even as valuations of US companies have appeared high compared to their peers. As the global ec...
Climate change and sustainability is now mainstream - we launch ESG analysis into all of our fund research…