Aberdeen Standard Asia Focus (AAS) aims to identify market leading businesses in Asia with high and sustainable earnings when they are trading on attractive valuations and invest in them for the long term.
In 2018 the trust implemented a number of changes intended to improve long-term performance, after which it has become more concentrated, increased its weighting to technology companies and reorganised the investment team to be more ruthless with stocks that don’t match up to expectation. Hugh Young has taken more personal control and responsibility for the trust’s portfolio, although he has worked on the team since AAS was launched in 1995, and heads up Asia at Aberdeen Standard.
Over the long term, AAS’s performance has been outstanding. Over ten years, it has more than doubled the average annual NAV total return from the MSCI AC Asia Pacific ex Japan Small Cap Index. However, the trust did underperform in the 2016 and 2017 rally in China and tech-related names. Performance has improved since these changes were made to the process, helped by a change in market dynamics (as we discuss in the Performance section).
Since the changes, which were accompanied by a change of name from Aberdeen Asian Smaller Companies, the discount has been significantly tighter on average, although it is still wide at 11.5%. This is in line with its closest small-cap peer, but wider than the average of the all-cap AIC Asia Pacific sector, which is 7.8%.
Dividend growth has been strong in recent years, and the board does aim to maintain or grow the dividend. However, the yield is relatively low at 1.8%.