Fund Profile

Schroder Asian Total Return 15 April 2020


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Schroder Asian Total Return. 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.

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Schroder Asian Total Return (ATR) has been the standout Asia Pacific trust over five years, thanks to strong stock selection and an innovative hedging overlay based on proprietary economic modelling. Not only has the trust generated the highest NAV total returns in its sector, but as we discuss in the Performance section, it is also the top-performing trust on a risk-adjusted basis, with the hedging strategies helping protect investors in rough markets.

Managers Robin Parbrook and King Fuei Lee draw on the company research of Schroders’ large, locally based analyst team. They aim to identify high-quality companies and the best time to buy them, namely when companies’ current valuations underestimate their long-term growth potential. The philosophy is that if the managers are longer term in their thinking than their peers, the trust can outperform.

The hedging strategies are based on the results of short- and long-term statistical models. These models use numerous indicators to highlight the risks of a correction or periods of material overvaluation in the underlying stock markets, and suggest to the managers when to hedge out exposure to certain countries. This allows the managers to maintain exposure to their preferred stocks when they think they will continue to perform in absolute terms.

ATR has traded on a premium for most of the past two years. Following the emergence of the COVID-19 pandemic, it fell onto a wide discount but has rebounded to just a 1% discount at the time of writing.

The trust’s overall strategy aims principally for capital growth, but dividend growth on the underlying companies means that the prospective dividend yield is now 2.1%.

Analyst's View

In our view, ATR is an attractive way to invest in Asia’s growth for the long term, and its quality bias and focus on long-term fundamentals mean it could be an interesting option for those looking to cautiously get back into Asia after the recent sell-off. While Asia has exciting growth companies, its markets are also full of less interesting state-owned or controlled companies and those with troubling corporate governance. This means that a focus on stock-picking is essential, in our view.

ATR’s extra advantage is the hedging strategy, which has historically helped the managers navigate the volatility in Asian markets. Since the inception of the strategy in its open-ended format in 2007, the hedging overlays have had a good track record of providing some capital preservation in falling markets. While the trust has not outperformed in the current sell-off, we would attribute this to the temporary underperformance of blue-chip, high yielding names which have not held up as well this time round. In our view, the trust is likely to weather the coming volatility better than its peers, and we regard the current discount as a very interesting long-term entry point, albeit recognising that there may be more losses to come before markets recover.

bull bear
The strategy has an attractive track record of limited losses in falling markets and strong gains in rising markets Macro models can be confounded by one-off events and policymakers
A highly active approach which is more likely to lead to alpha generation Some will dislike the performance fee
The defensive elements to the approach could appeal in uncertain times Using gearing in a countercyclical fashion can magnify short-term losses
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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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