Results analysis from Kepler Trust Intelligence

Schroder Oriental Income Fund Ltd

13 November 2023

 

Schroder Oriental Income (SOI)

13/11/2023

Results analysis from Kepler Trust Intelligence

Schroder Oriental Income (SOI) has released its financial results for the year ending 31/08/2023.The trust saw its NAV decrease by 3.5% on a total return basis, which compares to a decrease of 8.1% for the trust's formal benchmark, marking another year of outperformance. 

Performance was materially impacted by currency movements. A number of countries' returns have delivered a positive return in local currency terms, but when the impact of currency translation back to sterling was taken into account, these returns were negative.

SOI has paid four quarterly dividends totalling 11.80p per share over the course of the year. This marks an increase of c. 3.5% on the previous year and the 17^th year of consecutive dividend growth.

The shares of the trust have remained at a discount throughout the year, ending the period at a discount of 4.5%.

The trust's chairman, Paul Meader, has taken the opportunity "to commend our investment manager for achieving such consistent and considerable outperformance over recent years" and has said of the future, "I look forward with modest optimism… the fundamentals of the region, its companies and their strong dividend growth will once again attract international capital. The company is well placed to benefit from that trend when it arrives."

Kepler View

In our opinion, managers Richard Sennitt and Abbas Barkhordar have navigated Schroder Oriental Income (SOI) admirably through the challenging 12-month period to August 2023. The region has been affected by changes in sentiment due to a series of troubling factors, ranging from sky-high inflation and poor US-China relations to sharply rising interest rates.

These factors have led to fluctuating returns across the region best demonstrated by the volatile performance of Hong Kong and China. They declined as zero-covid policies hampered the economy, and then recovered as these policies were lifted, before waning again as the recovery failed to materialise as expected. The managers have been underweight China which has helped and been supported by good company selection. We believe this is testimony to the stock selection capabilities which has repeatably driven outperformance. Furthermore, positions in Korea and Taiwan, particularly in tech have been strong performers over the course of the year. We believe this is another example of the managers' quality approach benefitting the trust.

Absolute performance has been affected by a strengthening of sterling which led to every country delivering negative returns when translated back. However, the relative performance versus the index is impressive in our opinion. Richard and Abbas have outperformed by 4.6% largely as a result of stock selection. The trust delivered a 17^th consecutive year of dividend growth. This, in our opinion, shows the strength of identifying firms with sustainable dividends and supports our view of the trust being a very good way of accessing the growing dividend culture in Asia. 

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.

 

END