Fund Profile

Disclaimer

This is a non-independent marketing communication commissioned by abrdn. 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
The strong performance of AAS, and Asian smaller companies, has gone under the radar…
Overview

abrdn Asia Focus (AAS) owns a relatively concentrated portfolio of smaller companies from across the Asian region. The three-strong management team of Flavia Cheong, Gabriel Sacks and Xin-Yao Ng use a bottom-up, stock selection driven process to identify companies that have been overlooked due to a lack of research coverage in the market. This has contributed to strong Performance over both the near and long term, especially in absolute terms, with Asian smaller companies outperforming larger-cap peers.

The handover of management duties has recently been completed, following the retirement of veteran manager Hugh Young. Gabriel and Flavia have worked alongside Hugh for a number of years to ensure continuity of the strategy. The managers have made tweaks to the tail of the portfolio, exiting a small number of legacy positions with few near-term catalysts, allowing capital to be deployed in companies with stronger earnings growth potential (see Portfolio).

The trust implemented a new Dividend policy in 2021, which continues to offer investors a modest income alongside the capital growth goal. Underlying revenue remains on track to pay an increased dividend at the end of the trust’s financial year, indicating a potential yield of 2.3%.

Despite the strong performance of the asset class and the trust, the shares of AAS remain at a wide Discount to NAV. The level has traded within a range for much of the past five years, though has widened out in the near term.

Analyst's View

We believe Asian smaller companies are an overlooked asset class. Not only do they offer diversification to their large-cap peers, and arguably more direct exposure to the growth themes driving the region, but their performance has been very strong, both in absolute terms and relative to large-caps over the short and long term (see Performance). AAS offers investors a very compelling way of accessing these attractive characteristics in our opinion, with a bottom-up, stock selection driven process driving outperformance of the index whilst still being mindful of risk (see Portfolio).

Furthermore, the relatively new Dividend policy has also contributed to the trust trading on a modest yield, further adding to the investment case in our opinion. We understand income generation has been healthy this year, with upside potential from a special dividend, which has often been a feature.

Furthermore, the trust is currently trading at a wide Discount to NAV. Whilst this has remained within a range for much of the past five years, we believe there are factors on the horizon, such as the tender offer, which could provide some upside pressure. As such, the current level could prove an attractive entry point for long-term investors.

Bull

  • Trust has delivered strong absolute and relative performance versus index and large-cap peers
  • Discount remains wide and a potentially attractive entry point
  • Dividend is well supported by revenue and adds appeal to the investment case

Bear

  • Trust runs structural gearing, which can amplify downside as well as upside potential
  • Management handover, whilst well planned for, could lead to changes
  • Discount has remained wide for a prolonged period
Continue to Portfolio

Fund History

20 Jul 2024 Just can’t get enough
Around the world in three small-cap trusts…
18 Jul 2024 abrdn Asia Focus
Gabriel Sacks
Rewatch this webinar as part of our July online series 'Small caps - take two' hosted by the team at Kepler Trust Intelligence...
Watch Recording
25 Jun 2024 Fund Analysis
The strong performance of AAS, and Asian smaller companies, has gone under the radar…
07 Mar 2024 Asia small cap investing with AAS – Podcast: Trust Issues #26
We talk to Manager Gabriel Sacks about valutions, performance, and more...
30 Nov 2023 Fund Analysis
AAS outperforming its benchmark, which is itself beating large-caps index…
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?
03 May 2023 Fund Analysis
AAS offers a lower-risk approach to the high-growth potential of Asian smaller companies…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
02 Nov 2022 The stability dividend
Our analysis shows that trusts paying a regular income suffer less discount volatility...
11 Oct 2022 Fund Analysis
A further ramp-up towards Chinese stocks is expected after recent policy changes…
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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