Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Invesco Asia. 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

Invesco Asia Trust (IAT) aims to outperform Asian markets using a contrarian stock-picking strategy with a mixture of growth and value elements. Manager Ian Hargreaves has generated significant outperformance of the benchmark in his first five years in charge, as we discuss in the Performance section. Since the start of this 2021 financial year IAT also offers a yield of 2% of NAV every half-year (4% p.a. on a stable NAV). This is paid out of capital if necessary, meaning Ian’s stock selection approach is unchanged.

IAT’s outperformance has been built on Ian’s stock selection process, with some IT and ecommerce names being particularly important to returns over the full five-year period. While IAT retains large positions in those companies which Ian believes justify their valuations, he has increasingly been tilting the portfolio back towards companies which were left behind post-pandemic. In his view, these offer good earnings prospects that aren’t reflected in their valuations. His approach has helped IAT to perform strongly as economic optimism increased in the last months of 2020.

Ian actively uses modest levels of gearing depending on how he sees market valuations. Towards the end of 2020 gearing has been reduced as market level valuations rose above long-term averages. Ian is cautiously optimistic for an economic recovery in 2021, but believes that stock selection will be critical.

IAT’s discount narrowed significantly after the new dividend policy was brought in. However, it has recently widened out to 10.7%, much wider than the 3.2% average of both the AIC Asia Pacific Sector (within which it sits) and of the AIC Asia Pacific Income sector.

Analyst's View

IAT offers a powerful combination of total return potential and a yield of 4% of NAV each year. Ian’s first five years as manager have been successful, despite his valuation-sensitive and stylistically balanced approach being unfavourable in the past few years in which high growth and momentum strategies have outperformed. However, as we face what we hope is a year of normalisation, we believe IAT’s more balanced approach will be attractive.

IAT has significant weights to what Ian believes are the best opportunities in the IT, consumer discretionary and ecommerce sectors, but also exposure to areas which have lagged, such as financials and India as well as other stock specific stories. Indeed, IAT’s more valuation-sensitive approach has really helped in the second half of 2020 and is a key reason returns have been ahead of the benchmark for the year despite the trust falling more than the market in the February/March crash.

We think the wide discount offers a real opportunity, with the other Asia trust offering a total return approach and a 4% dividend from capital trading on a small premium. We note the new dividend policy initially helped the discount narrow, although over the last month shares have failed to keep up with a sharp rally in NAV.

bull BEAR
New dividend policy offers substantial yield on top of capital growth potential
Dividend will not be predictable as it will depend on NAV
A track record of long-term outperformance under this manager
High degree of macro uncertainty means world and Asian markets could struggle in 2021
Balanced factor exposure should help limit volatility to market rotations
Gearing, although generally modest, does increase exposure to down markets as well as up markets
Continue to Portfolio

Fund History

10 Jun 2022 Keeping your discipline
It’s tempting to try and predict the unpredictable. IAT shows the benefits of keeping to your investment principles...
09 Mar 2022 Fund Analysis
IAT could appeal to investors looking to diversify in a growth-heavy sector…
16 Feb 2022 Investing in Asia with investment trusts
How closed-ended funds can help investors get exposure to Asian companies…
03 Feb 2022 Video update: Invesco Asia
Update from new co-manager Fiona Yang...
06 Oct 2021 Slides and Audio: Invesco Asia
Download the presentation and listen to the audio from our 'Now that's what I call a discount!' Autumn conference on 30 September...
23 Sep 2021 Now that's what I call a discount 2021!
For the second year running we examine trusts on discounts which, in our view, don't make sense...
25 Aug 2021 Is the UK’s debt a ticking time bomb?
Our analyst argues Rishi is right to worry about government debt and borrowing…
09 Aug 2021 Fund Analysis
IAT has enjoyed a strong period of outperformance, boosted by a diverse group of companies…
09 Mar 2021 Asian opportunities in challenging times
Ian Hargreaves, manager of Invesco Asia Trust plc, believes the strength of the Asian equity markets are on the up since their March 2020 lows...
21 Jan 2021 Fund Analysis
IAT has significantly outperformed in Ian Hargreaves’ first five years as sole manager…
24 Sep 2020 Fund Analysis
IAT’s new dividend policy will see it pay 4% of NAV as a dividend each year…
06 Aug 2020 Ian Hargreaves
Ian Hargreaves is co-head of the Asian & Emerging Markets Equity Team at Invesco in Henley on Thames and runs a number of pan-Asian portfolios including Invesco Asia Trust (IAT), Invesco Asian Equity Fund and the Invesco Global Emerging Markets Fund (UK)...
28 May 2020 Opportunities from the Covid-19 crisis
Ian Hargreaves of Invesco outlines key questions to be considered through this 'black swan' event...
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
22 Jan 2020 Fund Analysis
IAT’s cheap portfolio is positioned for a strong 2020 in Asian markets…
06 Nov 2019 Poacher turned gamekeeper
Former fund manager - now investment trust chairman - Neil Rogan discusses how his own lessons from the job have helped him in his role...
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...
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
Invesco Asia offers a diversified portfolio that has outperformed in a variety of market conditions...
10 Jul 2018 Outlook for Asia: still positive?
Invesco's Ian Hargreaves gives his take on the trade war and more...
19 Apr 2018 Fund Analysis
This concentrated portfolio of Asian equities has a strong track record, yet it continues to trade at a significant discount...
19 Apr 2018 What now for Asia?
We examine battered Asian equities amid talk of a trade war between the US and China...
30 Nov 2017 Race ready?
We analyse the outlook for emerging markets and, in particular, the genuine active funds that focus on them…
29 Nov 2017 Fund Analysis
An unconstrained strategy focused on Asian equities with a bias towards smaller companies...
02 Jun 2017 Finely balanced...
We take a closer look at the Asia Pacific ex Japan sector following a period of improved inflows into the open-ended sector and the recent outperformance of Asian equities...
View all

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