Fund Profile

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
SDP’s pragmatic approach has driven another year of outperformance…
Overview

Schroder AsiaPacific (SDP) owns a portfolio of predominantly large-cap companies, which co-managers Richard Sennitt and Abbas Barkhordar identify through a bottom-up approach that looks for quality, but at attractive valuations. They are supported by Schroders’ extensive analyst network based in several offices in the region which help identify under-researched opportunities during the stock selection driven process.

The Asian market has been through a period of significant gyrations in the past year. China and Hong Kong have struggled due to an expected post-pandemic bounce failing to materialise, while South Korea and Taiwan have done well due to their high number of technology companies. This has played into the managers’ positioning and has had a positive impact on relative Performance.

More recently, the managers have been adding to China at the margin, though they remain underweight due to their cautiousness on the country’s structural issues. They have been selective, adding to quality companies they have monitored for a while, but are now trading at attractive valuations. Meanwhile, following the strong performance of their tech positions, they have taken some profit where valuations look full, demonstrating their disciplined approach – though the sector remains a significant overweight (see Portfolio).

The trust continues to trade at a Discount approximately in line with the five-year average as well as the average of the peer group. The board has been active in buying back shares, repurchasing c. 5% of the outstanding share capital in the past 16 months.

The managers have applied a modest amount of Gearing. This has not been a significant feature of the trust over the past few years, though has increased to 2% over the past few months, reflecting the number of opportunities the managers have identified.

Analyst's View

Richard and Abbas have delivered another strong year of relative performance as a result of astute positioning led by their bottom-up stock selection process. We believe this reinforces SDP’s position as one of the more compelling trusts in the Asia Pacific sector.

The managers have continued to show discipline and have trimmed areas that have done well, such as technology, and rotated into areas where quality companies have fallen back to attractive valuations, most notably in China (see Portfolio). Despite this, the managers continue to be underweight the country due to concerns over a number of structural issues – although this is in part offset by an overweight to Hong Kong. The valuation discipline underlines the trust as a core offering which we think should appeal to investors who wish to gain broad exposure to the region, but share the managers’ hesitancy over the prospects for the Chinese market.

We believe the current Discount offers a compelling entry point. Whilst only in line with the five-year average, it should provide additional alpha in the event of a recovery in the region, which the managers believe has a number of factors that could provide a catalyst. The fact they have utilised a modest level of Gearing despite it rarely being a feature supports this, as does the high level of share buy-backs undertaken by the board.

Bull

  • Impressive long-term outperformance driven by stock selection
  • Trading at a wide discount
  • Easing economic headwinds could support a recovery in the region

Bear

  • Portfolio’s growth tilt likely to underperform in value rallies
  • Underweight position to China could be exposed to government stimulus boosting the market
  • A pullback in tech after a strong run due to AI demand would impact trust’s overweight
Continue to Portfolio

Fund History

07 Jun 2024 Monthly round-up of investment trust news - #1
Jo and Ryan discuss the latest news in the investment trust world...
21 May 2024 Results analysis: Schroder AsiaPacific
A tech overweight and China underweight have contributed to another period of SDP outperformance…
14 May 2024 Crouching tiger, not so hidden dragon
SDP is well-positioned to benefit from the compelling growth story in Asia…
22 Mar 2024 Schroder AsiaPacific Fund plc: Why active investing works in Asia
How a consistent, disciplined investment approach can add value
20 Feb 2024 Fund Analysis
SDP’s pragmatic approach has driven another year of outperformance…
12 Dec 2023 Results analysis: Schroder AsiaPacific
SDP has delivered another year of outperformance, yet still trades at a discount…
15 Nov 2023 Asia’s growth opportunities
World-leading companies and domestic growth stories can be found throughout the region…
15 Nov 2023 The Asian century
Failing to invest in Asia means omitting half the global economy from your portfolio…
14 Jul 2023 Asian investment trusts: an abundance of opportunity
Exploring investors’ renewed enthusiasm for Asian equity...
07 Jul 2023 Investment trusts: Exploring the positive backdrop for Asian equities
Schroder AsiaPacific Fund: Backing the brightest growth prospects in Asia...
01 Jun 2023 Investing in quality companies in Asia, with Schroder AsiaPacific's Abbas Barkhordar - Podcast: Trust Issues #17
We talk China, Vietnam and buy/sell decisions...
23 May 2023 Fund Analysis
SDP has delivered strong long-term outperformance driven by stock selection…
16 Dec 2022 Investment Trusts: opportunities in all market conditions
How are current market conditions impacting the Schroders investment trust range?
20 Oct 2022 Fund Analysis
SDP invests in quality companies to take advantage of the long-term secular growth opportunities in Asia…
08 Apr 2020 Children of the Revolution
The outperformance of technology hints at an exciting possible future for the market when the virus is beaten…
01 Apr 2020 Fund Analysis
SDP is the standout Asia Pacific trust over ten years…
06 Nov 2018 Fund Analysis
Schroder AsiaPacific aims to generate long-term capital growth from a portfolio of emerging Asian equities...
10 Oct 2018 Information overload
Our analysis shows the long term case for emerging markets remains largely unaffected by much of the negative newsflow surrounding the sector...
19 Apr 2018 Fund Analysis
A quality oriented Asian equities fund which has performed well throughout the cycle under a highly experienced manager.
19 Apr 2018 What now for Asia?
We examine battered Asian equities amid talk of a trade war between the US and China...
19 Jan 2018 Full steam ahead?
Jupiter Fund of Investment Trusts manager Richard Curling gives his view on the potential risks and rewards for the major equity regions around the world in 2018...
30 Nov 2017 Race ready?
We analyse the outlook for emerging markets and, in particular, the genuine active funds that focus on them…
29 Jun 2017 Brave new world
We find out how the outlook appears today to you, and ask the top managers in each sector, region and asset class where they see the opportunities in it...
20 Jun 2017 Fund Analysis
An Asian equities trust run by a highly experienced manager, a focus on high quality-companies and low charges compared to its size...
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...
07 Mar 2017 A challenge of perception
Asian Total Return Investment Company chairman David Brief says the trust's total return focus is misunderstood by many investors....
View all

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