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
IAT is a long-term outperformer on a significant discount…
Overview

Invesco Asia (IAT) is co-managed by Ian Hargreaves and Fiona Yang, who aim to generate attractive total returns through a concentrated portfolio of c. 60 holdings. They take a contrarian approach, using bottom-up stock selection that focusses on fundamental analysis to identify companies that are out of favour and therefore undervalued, and holding them as sentiment changes (see Portfolio). This strategy has delivered substantial NAV total return outperformance of the benchmark over five years (see Performance). IAT is also ahead over one year.

To complement the capital growth potential, the trust also has an enhanced Dividend policy which pays out 2% of NAV semi-annually. This is generated from a combination of the natural income of the underlying holdings, as well as a contribution from capital, which allows the managers to focus purely on the total return opportunity of each stock without having to focus on the contribution to yield.

Ian and Fiona had been reducing their underweight to China coming into the year, viewing the market as cheap in the light of an expected reopening boost. So far, this reopening trade hasn’t played out as many investors had expected. Looking forward, the managers believe this is a temporary setback, and there are plenty of opportunities. In China, valuations are deeply discounted and back to pre-reopening levels in some cases, despite a better backdrop. This provides the potential for positive earnings surprises and elsewhere in the region, they are finding plenty of other opportunities due to their value-centric approach.

IAT trades on a Discount of 13.1%, compared to its own five-year average of 10.7% and the five-year sector average discount of 7.2%.

Analyst's View

We believe the case for IAT has two key elements, the first being the trust; it offers a contrarian approach to investing in the region, which helps it stand out amongst its peers, with a Portfolio that is unlikely to be held elsewhere. This is best demonstrated by the underweight allocation to the expensive Indian market. The contrarian, valuation-sensitive approach has proven to be an effective way to invest in a region with complicated macroeconomics and market dynamics. There is also the enhanced Dividend policy, which adds an extra element of attraction to a region that isn’t renowned for yield generation. As such, we believe IAT can work as a good income diversifier for investors.

The second element is ‘why now?’. The managers have highlighted that valuations for the broader region are very compelling, with many areas in China, in particular, having returned to levels not seen since before the reopening announcement (see Performance). We believe this effectively prices in no gain from the reopening of the Chinese economy post-lockdown, which, whilst we appreciate hasn’t followed the example set in developed markets, is unlikely to be so minimal. As such, we believe there is plenty of scope for upside surprises to come from earnings and that Ian and Fiona will be very well placed to capture these, considering their contrarian approach. Furthermore, the shares are currently trading at an attractive Discount, despite the strong performance record.

Bull

  • Contrarian approach with valuation focus that differentiates the trust from peers
  • Valuations are very compelling, with the potential for positive earnings surprises
  • Enhanced dividend policy provides a good level of income from a diversified source

Bear

  • China is largest country weight and is facing a number of headwinds
  • Dividend is based on NAV, meaning it is unpredictable
  • Discount has remained stubbornly wide
Continue to Portfolio
2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
04 Oct 2023 Fund Analysis
IAT is a long-term outperformer on a significant discount…
08 Sep 2023 Why we think taking a contrarian view works for investing in Asia and emerging markets
It might seem confusing to buy assets that are out of favour while selling those that are popular. But if you want to get value out of what you buy, Fiona Yang believes it helps to take a contrarian approach...
25 Aug 2023 Is China a value play?
Almost all Asia managers are underweight the world’s second-largest economy...
28 Jul 2023 Investing in Asia beyond China
While China is our largest geographical allocation for many of our portfolios, we believe there are plenty of exciting companies in the wider Asia region...
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?
09 Jun 2023 Investing in Asia with investment trusts
How closed-ended funds can help investors get exposure to Asian companies…
22 Mar 2023 Fund Analysis
IAT’s discipline has been rewarded, and it offers differentiation going forward…
02 Mar 2023 The Devil’s in the demographics
China’s population is in decline - should it turn east or west for inspiration..?
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
07 Oct 2022 Are the China contrarians right?
Maybe it’s not all so bad in the world’s second-largest economy…
09 Sep 2022 Talking trusts: Invesco Asia Trust
In this video interview, we speak to Invesco Asia Trust managers Ian Hargreaves and Fiona Yang, discussing how they’ve navigated the choppy waters of Covid, the methodology they use to pick their investments, and why they think China is a contrarian choice to make today...
25 Aug 2022 Fund Analysis
IAT is in its element in the current environment and is on course for the third straight year of outperformance…
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…
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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