Results analysis from Kepler Trust Intelligence

Schroder Asian Total Retn InvCo PLC
10 September 2024
 

Schroder Asian Total Return (ATR)

10/09/2024

Results analysis from Kepler Trust Intelligence

Schroder Asian Total Return (ATR) has released its half year results for the period ending 30/06/2024. The trust saw a NAV increase of 10.1% on a total return basis, which compares to a benchmark return of 9.5%. The AIC Asia Pacific sector average delivered a total return of 10.8%. 

The outperformance was predominantly driven by the managers' technology holdings, including TSMC which benefitted from the expected increase in AI driven demand. The managers' underweight allocation to China, particularly to consumer focussed companies was also a positive.

This was somewhat offset by financials holdings in India, the Philippines and Indonesia, although stock selection was still positive overall. This has further contributed to ATR's considerable long-term outperformance relative to its benchmark, which it leads over one, three and five years.

Robin and King Fuei use econometric models to influence their positioning and risk approach. These models turned from slightly positive to a more cautious outlook. As such, gearing has been reduced and the managers have implemented options strategies to provide some capital preservation.

The managers remain overweight Taiwan and Korea, though have been trimming strong performers. They managers remain underweight China and Hong Kong, due to consumer concerns.

ATR's discount has widened over the six-month period despite the strong NAV performance.

Commenting on the results, Chair Sarah MacAulay reflected on the ongoing performance attribution and that "stock selection will continue to be the critical factor in adding value to the portfolio and securing long term relative outperformance".

Kepler View

Schroder Asian Total Return (ATR) is managed by Robin Parbrook and King Fuei Lee and offers unique Asian exposure due to the managers' benchmark agnostic approach and the use of hedging strategies. The half-year results have reported a period of strong performance, driven by good stock selection, primarily from their technology overweight. TSMC has contributed to this, though the managers have, in our opinion, shown discipline by taking profits on the holding.

The managers have also added some protection to the portfolio, taking indication from their hedging models. This includes a reduction in gearing, and the addition of some protection from market volatility. We believe this is a standout feature of ATR and could appeal to those who appreciate the long-term growth potential of the Asian region but have concerns over short-term volatility.

The current positioning may also appeal to risk-aware investors, in our opinion. The managers are underweight China over weak consumer sentiment concerns. However, they are overweight the region's developed economies, such as Australia and Singapore, which we believe adds defensiveness. Furthermore, they are underweight India on valuations grounds, whilst overweight Indonesia and the Philippines which offer similar traits, such as strong GDP growth, but with more attractive valuations.

Despite the strong NAV performance, the discount widened to 7.0%. The board has been buying back shares to manage this, with nearly 1.8m shares bought back in the six months covered by the results. Over the past five years, ATR's shares have traded close to NAV, including periods at a premium. As such, we believe the current level could be an attractive entry point for long-term investors. Furthermore, the ongoing share buybacks should be supportive in narrowing the discount.

CLICK HERE TO READ THE FULL REPORT 

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

 

Important information

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 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 70 Conduit Street, London W1S 2GF with registered number OC334771.

 

This information is provided by Reach, the non-regulatory press release distribution service of RNS, part of the London Stock Exchange. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
UK 100

Latest directors dealings