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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
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Overview

abrdn Asia Focus (LON:AAS) is a trust focussed on opportunities from the smallest companies in the Asian region, typically investing in the bottom 20% by market cap in each country. The trust is managed by a four-strong management team who have access to abrdn’s global analyst resources, including significant on-the-ground support. The aim is to have an informational edge in the large, but under researched, Asian smaller companies space (see Management). As such, the trust will likely look very different to the index and offer a portfolio of companies that is unlikely to be seen elsewhere (see Portfolio).

The managers are conscious of the risk in this space. Consequently, they have built a portfolio with diversification across sectors, countries and investment styles, with the aim of offering a lower-risk approach to the exciting growth opportunity that it offers. Despite this diversification, stock selection is intended to be the primary driver of Performance, aided by the experience of the managers and the size of the team. The diversified approach is designed to lead to incremental outperformance each year, rather than knock-out numbers. This has led to strong long-term outperformance of the index over five years.

Since 2018, the managers have been rotating the portfolio to the new breed of Asian companies, such as innovative tech firms, but only at sensible valuations. This has resulted in a narrowing of the underweight to China, where they are starting to find good ideas, having previously been sceptical. Nevertheless, the portfolio has retained its longstanding tilt to companies in South East Asia, relative to the more developed north Asian markets.

Analyst's View

Much of the world’s growth over the past few years has been driven by Asia, and smaller companies often outperform their larger peers over the long term. This trust offers exposure to both of these exciting factors, but in a risk-controlled manner. We think that not only does this make the trust attractive in its own right, but also that it makes it a potential complementary holding with either passive Asian exposure or an active fund, focussed on larger, more mainstream Asian companies (see Portfolio).

Despite the growth potential, the region remains significantly out of favour. The managers have pointed to a more benign inflation picture and strong growth outlook as reasons to be more positive. They believe the trust’s quality metrics are particularly attractive, as they are considerably better than those of the market, and yet valuations are only marginally higher (see Performance). AAS has the widest Discount in the limited peer group, which we believe adds to the compelling opportunity for long-term investors.

The trust has recently adopted a new enhanced income policy. This has allowed it to greatly increase its payout, to offer an attractive yield of 3.1%, which we believe adds another appealing element (see Dividend). The current yield is in line with that of the index, despite the arguably better growth on offer in the portfolio, and that more of this income has been generated by the underlying portfolio than the managers were expecting. We believe that this could lead to a further increase in the dividend in this financial year.

Bull

  • Long-standing management team with deep local analyst resource
  • Attractive dividend to complement total returns
  • Trust is trading at a wide discount

Bear

  • Diversified approach, which may limit outperformance in any one year
  • Gearing can exacerbate losses, as well as improve returns
  • Sector has been at a sustained discount
Continue to Portfolio

Fund History

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...
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Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.