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Fund Profile

Schroder Asian Total Return 19 July 2022

Disclaimer

This is a non-independent marketing communication commissioned by Schroder Investment Management. 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

Schroder Asian Total Return (ATR) applies a sophisticated strategy in order to allow investors to benefit from the growth opportunities in Asian companies while moderating the volatility often seen in the region’s markets. After a highly successful open-ended vehicle was soft-closed in 2010 it is the only option for new investors looking to access this strategy.

As we discuss under Performance, over the long-term the trust has delivered exactly the sort of return profile it is intended to. There has been significant alpha delivered versus the benchmark, with the trust having a tendency to perform well in falling markets. To some extent this reflects stock selection and the impact of the quality and valuation factors the managers look for. Another factor is the hedging strategy which sees the managers apply short positions in country and regional indices based on battle-tested quant models looking at economies from the top-down and companies from the bottom-up.

The strategy is the brainchild of managers Robin Parbrook and King Fuei Lee, who have worked together for over 20 years and run the strategy since 2007 (ATR launched in 2013). They draw on the work of a team of 39 analysts covering the region to identify the companies they think will generate the best absolute returns over the medium to long-term, aiming to take a longer-term view than the market. The portfolio tends to be tilted towards quality stocks where the managers believe the best long-term opportunities are. Following a poor six months for markets and for the trust the Discount has widened out considerably.

Analyst's View

ATR has a number of attractions for the long-term investor. The track record of alpha generation is good. Meanwhile the focus on the long-term, on low turnover and on absolute returns are factors which could support alpha generation in future. Additionally, the hedging strategy should give some confidence that investors might be protected in some of the worst periods for markets. That said, the trust does have a quality / growth bias which has hurt it in recent months and offset any benefit from the hedges. If the current inflationary environment develops into a recession then short-term headwinds may remain strong.

In buying at the moment, however, investors can benefit from a rare discount which is wide relative to its history. In our view there is a better than average chance of the share price rating returning to its usual premium. In addition to the strong track record of the trust and the attractions of the strategy itself, there is technical support from the fact that the open-ended vehicle is soft-closed, which should direct any inflows to ATR’s shares. We acknowledge it may take some time for the current market environment to shift back to one conducive to the managers’ style. However, Robin and King Fuei are more optimistic than some, and think valuations of Asian markets are already attractive relative to history with the near-term outlook – over the next 12 months – looking good for positive returns. If they are right then we think the rating could recover quite swiftly.

Bull

  • The strategy has an attractive track record of limited losses in falling markets and strong gains in rising markets
  • A highly active approach which is more likely to lead to alpha generation
  • The defensive elements to the approach could appeal in uncertain times

Bear

  • Macro models can be confounded by one-off events and policymakers
  • Some will dislike the performance fee
  • Using gearing in a countercyclical fashion can magnify short-term losses
Continue to Portfolio
2024 Kepler Growth Rated Fund

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

Fund History

17 May 2024 Foot on the brakes
The US will struggle to stop China…
18 Mar 2024 Results analysis: Schroder Asian Total Return
Good stock selection has driven another year of outperformance for ATR…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
15 Nov 2023 Why it pays to be active in Asia
ATR’s highly active approach has delivered long-term outperformance for shareholders…
15 Nov 2023 The Asian century
Failing to invest in Asia means omitting half the global economy from your portfolio…
25 Aug 2023 Is China a value play?
Almost all Asia managers are underweight the world’s second-largest economy...
11 Aug 2023 Calling emerging markets
The rapid rate of smartphone adoption in emerging markets has improved lives and presents interesting opportunities to investors...
14 Jul 2023 Asian investment trusts: an abundance of opportunity
Exploring investors’ renewed enthusiasm for Asian equity...
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?
30 Jun 2023 High end China
Several managers are investing in higher-end consumer growth in the world’s second-largest economy…
29 Jun 2023 Bear in a China Shop
All the speakers at our emerging markets-focussed event last week see battered valuations in emerging markets – with the exception of the largest of them all – as a big opportunity…
14 Jun 2023 Fund Analysis
ATR’s Chinese underweight has set it apart from peers…
20 Jun 2023 Schroder Asian Total Return
Robin Parbrook
This webinar is part of our June online event 'Spotlight on emerging markets'
Watch Recording
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
16 Dec 2022 Investment Trusts: opportunities in all market conditions
How are current market conditions impacting the Schroders investment trust range?
19 Jul 2022 Fund Analysis
ATR’s sophisticated strategy is an attractive way to take long-term Asia exposure…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
15 Apr 2020 Fund Analysis
ATR is the standout trust in its sector for both absolute and risk-adjusted returns, now trading on a significant discount...
19 Feb 2020 Dialling down the noise
Schroder Asian Total Return Investment Company takes a unique approach to Asian markets which allows the managers to focus on targeted stock selection and effectively cancel out market noise through the selective use of hedging...
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...
03 Jul 2019 Fund Analysis
Schroder Asian Total Return seeks to limit the volatility of Asian stock markets while capturing the best stocks...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
08 Aug 2018 Feeling giddy?
As markets look toppy, we consider a few equity trusts with different approaches to diversification and risk management...
17 May 2018 Blast off!
As China A-Shares join the global indices, many investors remain structurally underexposed to this exciting region...
05 Mar 2018 Fund Analysis
A unique trust in the Asia Pacific sphere, aiming for long-term growth with a derivative overlay allowing stockpicking to drive returns...
09 Feb 2018 The madding crowd
Recent volatility could be a taste of things to come, so we examine trusts that offer capital protection...
30 Nov 2017 Race ready?
We analyse the outlook for emerging markets and, in particular, the genuine active funds that focus on them…
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...
31 Mar 2017 Bargain or basket case?
As the reality of Donald Trump's administration settles in, we examine the case for emerging markets exposure...
31 Mar 2017 Fund Analysis
A well resourced trust focused on Asian equities with a unique absolute return approach...
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