Fund Profile

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Overview
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Overview

Aberdeen Standard Asia Focus (AAS) is the purest small cap Asia Pacific trust. Managers Hugh Young and Gabriel Sacks take a quality growth approach to investing in companies they view as leaders in their industries with the potential to generate high and sustainable long-term growth.

While they look for sustainable growth, the managers also have a disciplined approach to valuations. This and a bottom-up based approach mean the portfolio is quite balanced across sectors and styles. The top performers in 2021 have come from both old and new economy stocks, illustrating the potential in such an approach, and in fact AAS is the top-performing Asia Pacific trust across the small and large cap sectors in 2021 (see Performance).

Whereas historically AAS had a bias to the consumer and financial sectors, over the last few years it has evolved into a rather different animal, aiming to combine the best of the old economy with a considerable weight to technology, high-tech manufacturing and ecommerce. As we discuss in the Portfolio section, technology and industrials are now the two largest sector positions.

AAS has long-term structural gearing which helps to balance the typically lower beta stocks in the portfolio given the quality growth approach. Net gearing is currently c. 10%.

Although the discount came in markedly around the start of 2021 as markets rallied, recently it has widened again and sits at 13.8%, close to its five-year average, despite excellent performance in the year to date and especially in the early summer.

Analyst's View

AAS is a different proposition from what it was in the past. The basic strategy has not changed, and it remains a quality growth proposition with a keen eye for valuations, but the tweaks to the process made by lead manager Hugh Young since 2018 have led to a diverse portfolio, encompassing fast-growing ecommerce stocks and traditional industries like shipping. What unites them is the quality characteristics that the managers see in them: their ability to grow faster than the market and their peers and their strong balance sheets which should see them through tough economic periods.

We think one such period is arriving, and the quality approach espoused by Hugh and Gabriel could pay off – it may even be the recent strong performance is the beginning of such a long-term trend, although it is too soon to be sure. Hugh and Gabriel report strong earnings on their portfolio this year as economies rebound. While they are cautious on the immediate outlook, given the pandemic is by no means over, they do report that some portfolio companies have seen their competitive positions improve during the crisis, which should be expected of high-quality market leading companies. We note that AAS strongly outperformed in the aftermath of the 2007/2008 financial crisis – as well as after the market turmoil of the tech bubble bursting in 2001. On a wide discount of 14%, it looks like an interesting exposure to take into the latest post crisis period.

bull bear
Focus on strong balance sheets and operational resilience should serve well in troubled environment
Structural gearing increases the downside risks
Strong secular growth potential in many of the region's economies
Highly active country allocations, such as the low weight to China, can lead to large under or overperformance at times
Extensive experience and resources in the Asian Equities Team
Portfolio is expensive relative to the market, which means earnings growth will need to meet expectations
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 our list of discount opportunities...
13 Feb 2019 Sweet treats
Eight trusts with the potential for strong returns, currently sitting on unusual 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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