Fund Profile

Schroder Asian Total Return 02 July 2019


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Schroder Asian Total Return. 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.

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Schroder Asian Total Return (ATR) aims to benefit from the impressive growth potential in Asian stock markets. At the same time, the managers seek to limit the equally impressive volatility that stock markets in the region have exhibited historically.

Managers Robin Parbrook and King Fuei Lee have built an investment process on a foundation of highly active, valuation-sensitive stock selection. They overlay this with the use of quantitative economic models to warn them of impending market corrections in the underlying countries, which allows them to apply hedges to the portfolio to limit the exposure to the downside.

The managers take a highly active, benchmark-agnostic approach, which they view as crucial in Asian markets. The valuation element to the stock-picking and the hedging strategy have helped the trust produce one of the highest upside/downside capture ratios in the sector over the past five years.

At the same time, the trust has handsomely outperformed the index and peer group under the strategy implemented by Robin and King Fuei since March 2013. Over the past five years, the trust’s NAV total return has been 110%, while the average trust in the AIC Asia Pacific ex Japan sector has returned just 76% and the index even less – 71.1%. The trust has also displayed NAV volatility significantly below the sector average over the period.

Although the trust has a total return objective, the managers view dividends as a sign of a well-run company and have been increasing their exposure to yielding companies as their view on the marker becomes more bearish. As a result, the trust’s dividend growth has been substantial in recent years, and the shares now yield 1.7%.

Schroder Asian Total Return has traded on a premium since July 2017, currently 1.3%, and has been regularly issuing shares. The trust has a performance fee charged on absolute rather than relative returns.

Kepler View

We think ATR offers an appealing way to invest in a volatile market. The strategy behind the stock selection and the hedging overlays have resulted in a portfolio with an attractive risk profile which has successfully managed to limit the losses in most falling markets. At the same time, the team have been able to capture much of the upside.

Beyond this, we agree with the managers that investing in Asia requires a highly active approach to isolate the well-run companies with solid growth prospects. The current premium rating seems to have developed at a time that investors were becoming more cautious on the outlook for the region and therefore more interested in strategies with a protective element. With the global economy seemingly nearer the end of the cycle than the beginning, we think ATR could well be an appropriate choice for Asian equity exposure.

Bull Bear
The strategy has proven it can limit losses in falling markets while providing good gains in rising markets Macro models can be confounded by events and policymakers
A highly active approach which is more likely to lead to alpha generation The yield is low at 1.7%, although dividend growth has been high
The defensive elements to the approach are well suited to a late cycle market, which we appear to be in Some will dislike the performance fee
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2024 Kepler Growth Rated Fund

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Fund History

18 Mar 2024 Results analysis: Schroder Asian Total Return
Good stock selection has driven another year of outperformance for ATR…
15 Nov 2023 Why it pays to be active in Asia
ATR’s highly active approach has delivered long-term outperformance for shareholders…
15 Nov 2023 The Asian century
Failing to invest in Asia means omitting half the global economy from your portfolio…
14 Jul 2023 Asian investment trusts: an abundance of opportunity
Exploring investors’ renewed enthusiasm for Asian equity...
05 Jul 2023 Silk Road Strife
The Asian narrative has been dominated by the India vs China debate, but on which side of the line have investment trust managers fallen?
29 Jun 2023 Bear in a China Shop
All the speakers at our emerging markets-focussed event last week see battered valuations in emerging markets – with the exception of the largest of them all – as a big opportunity…
20 Jun 2023 Schroder Asian Total Return
Robin Parbrook
This webinar is part of our June online event 'Spotlight on emerging markets'
Watch Recording
14 Jun 2023 Fund Analysis
ATR’s Chinese underweight has set it apart from peers…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
19 Jul 2022 Fund Analysis
ATR’s sophisticated strategy is an attractive way to take long-term Asia exposure…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
15 Apr 2020 Fund Analysis
ATR is the standout trust in its sector for both absolute and risk-adjusted returns, now trading on a significant discount...
24 Mar 2020 First in, first out?
We ask whether the brave should be raising their allocation to Asia...
19 Feb 2020 Dialling down the noise
Schroder Asian Total Return Investment Company takes a unique approach to Asian markets which allows the managers to focus on targeted stock selection and effectively cancel out market noise through the selective use of hedging...
03 Jul 2019 Push-me pull-you
Two contrasting influences are dominating the outlook for Asian markets - we analyse them and how Asia trusts are positioning their portfolios in response...
02 Jul 2019 Fund Analysis
Schroder Asian Total Return seeks to limit the volatility of Asian stock markets while capturing the best stocks...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
08 Aug 2018 Feeling giddy?
As valuations continue to soar, we consider a few equity trusts with different approaches to diversification and risk management...
16 May 2018 Blast off!
Many institutional investors are structurally underexposed to one of the fastest growing parts of the world even as China A-Shares join the global indices...
28 Feb 2018 Gimme shelter
As the bear market for bonds and corresponding volatility in equities escalates we examine trusts that offer excellent capital protection..
27 Feb 2018 Fund Analysis
A unique trust in the Asia Pacific sphere, aiming for long-term growth with a derivative overlay which allows stockpicking to drive returns...
27 Sep 2017 A risk aware route to the best that Asian equities have to offer
21 Mar 2017 Fund Analysis
21 Mar 2017 Eyes on the price...
As the reality of Donald Trump's administration settles in and market momentum continues to grow, we examine the case for emerging markets exposure...
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