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 strategy with a mixture of growth and value elements. Manager Ian Hargreaves has generated significant outperformance of the benchmark since taking over in 2015, as we discuss in the Performance section.

However, the discount has remained persistent, and the board has taken decisive action, deciding to pay out a dividend worth 2% of NAV each half year. Crucially, there will be no change to Ian’s tried-and-tested approach to stockpicking but the payout will come from capital, where the natural income of the portfolio is not sufficient. We note that the portfolio yield has risen to 2.6% in recent years, as a dividend paying culture has taken greater hold in the region. The full details are in the Dividend section.

The current discount of 14.9% is wider than the AIC Asia Pacific sector average of 8.8%, and much wider than the AIC Asia Pacific Income sector average of 4.5% – for which sector IAT will now qualify.

Ian’s approach focuses on stockpicking, and he aims to buy companies with undervalued growth prospects. This approach led the portfolio to have a cyclical tilt at the start of 2020; positioning that proved unhelpful in the unforeseen and unforeseeable pandemic. However Ian has been raising exposure to those sectors and companies which he thinks now look attractively cheap and have the best prospects of recovering faster and stronger. The result is a portfolio balanced between growth and value characteristics with major exposures to technology and ecommerce as well as consumer and industrial names which have been more out of favour.

Analyst's View

IAT’s new offering mixes a high dividend yield with a total return strategy, a powerful combination in our view. Ian’s fundamental, bottom-up stockpicking has a good track record of outperforming the market in total returns. The new dividend policy means that this approach will carry on, and investors can continue to gain access to a variety of sectors and factors, including high-growth technology and ecommerce names, while also drawing a considerable yield. With this new approach in mind, this begs a comparison with the current 5% average of the AIC Global Equity Income sector and, for example, the tighter discount of JPMorgan Asia Growth & Income: the other trust in the sector to take a total return approach and pay a dividend out of capital.

This could be a good time to take a more valuation-sensitive approach when investing in Asia. We have seen a huge disparity in returns and valuations between sectors and countries in the rebound from the March lows. We think it likely some of this disparity will close, and there could be opportunities in out-of-favour sectors. IAT provides diversification to the most popular growth strategies with exposure to technology and ecommerce names which Ian thinks are undervalued, given their growth potential alongside positions in the more battered consumer and industrial sectors.

bull bear
New dividend policy could see a rerating of the discount Dividend will not be predictable as it will depend on NAV
A strategy which has a track record of long-term outperformance
High degree of macro uncertainty means world and Asian markets could see a double dip
Balanced factor exposure should limit volatility to factor rotation
Gearing, although generally modest, does increase exposure to down markets as well as up markets
Continue to Portfolio

Fund History

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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