Fund Profile

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Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by abrdn 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.

Overview
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Overview

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%.

Kepler View

The improvement in NAV performance over the past year has been impressive, as a period of strong stylistic headwinds has come to an end. With the outlook for Asian markets looking cloudier, we could well see the trust’s more defensive characteristics doing relatively well in the coming months. We don’t think this potential and the improving NAV performance has been fully reflected in the share price yet and continue to consider the discount of 11.9% to be an interesting value opportunity. Aberdeen Standard Asian Focus remains in our portfolio of discount opportunities.

Bull bear
A highly attractive discount relative to peers with an improving performance record The strategy has led the trust to have long-term underweights to China and technology; if these outperform it will lag
A more concentrated portfolio will increase the potential for the trust to outperform
More concentrated portfolio will lead to higher NAV volatility / higher tracking error, which could lead to periods of underperformance
The experience of the manager is second to none

Continue to Portfolio

Fund History

20 Apr 2022 On the hunt
We review discounts in the investment trust space against a backdrop of harsh conditions...
04 Feb 2022 Fund Analysis
AAS’ board is building on a period of strong performance with crucial improvements to the strategy…
29 Sep 2021 Slings and arrows
Our analysts argue over whether it’s better to take arms against volatility in a portfolio, or to simply suffer it…
28 Jul 2021 Fund Analysis
AAS offers exposure to exciting growth companies in Asia, and has traditionally done very well after global crises…
14 Jul 2021 Grade inflation
We look at how our discounted opportunities portfolio has done in the first half of the year and update on the performance of our long-term rated funds…
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
14 Apr 2021 Wide Boys
We review our portfolio of chonky discounts as one star performer hits its target…
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: Aberdeen Standard Asia Focus
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 02 March...
04 Feb 2021 Fund Analysis
AAS’s quality approach to Asian small caps saw it outperform after the last two global crises…
24 Sep 2020 Bull in the Chinese market?
The Chinese stock market has been a notable winner thus far in 2020. Should investors stay the course, or take profits?
20 Aug 2020 Fund Analysis
AAS’ high quality portfolio should be robust in a troubled economic environment...
05 Mar 2020 Don't panic: the case for investing in Asia this ISA season
We examine the relationship between stock market and GDP growth, before debating the case for an allocation to Asia...
11 Feb 2020 Fund Analysis
AAS has been reinvigorated following Hugh Young taking more personal control…
21 Aug 2019 All change: a closer look at the AIC's revised sectors
We examine the AIC's revised sector classifications and discuss whether further improvements could be made...
05 Aug 2019 Fund Analysis
Aberdeen Standard Asia Focus (AAS) aims to generate long-term capital growth from a valuation-sensitive approach to Asian smaller companies..
01 May 2019 Sweet or sour?
Three months in, we check up on the progress of our discount opportunities portfolio...
13 Feb 2019 Sweet treats
The eight trusts with strong prospects, but wide discounts...
04 Feb 2019 Fund Analysis
The trust returned to form last year with strong relative returns as its focus on quality was rewarded in rough markets...
View all

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