Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Schroder AsiaPacific. 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 is the standout Asia Pacific trust over ten years…
Overview

Schroder Asia Pacific (SDP) offers access to a portfolio of high quality Asian companies selected for their long-term growth potential. The manager, Matthew Dobbs, tells us he is focused on finding the highest quality companies, in terms of both financials and corporate governance. He has constructed a portfolio of the most attractive stocks, bought when he thinks they are being undervalued by the market, with a long-term view and little attention paid to short-term market movements.

As we discuss in the Performance section, the trust has an outstanding long-term track record, generating the best NAV total returns in the AIC Asia Pacific sector over ten years and top- quartile returns over five years. This has been driven by stock selection rather than country or sector positioning, in line with the manager’s intentions. SDP’s share trade on a 14% discount, having widened substantially after the coronavirus pandemic started to spread. The board views 10% as a target level, however it takes into consideration market conditions and the discounts of peers.

Many of Matthew’s most successful stock picks have been in the new economy sectors of information technology and consumer discretionary. Although he is a thirty-year veteran of the market, Matthew has been early to latch on to some of the biggest winners in the market such as Tencent and Alibaba. As well as to his own judgement, this is testament to the benefit of having a team of almost forty analysts spread across six countries in Asia, working with local knowledge and with their ears to the ground of a rapidly changing continent.

Analyst's View

Schroder Asia Pacific is an excellent core holding for investors who want exposure to the exciting growth potential in Asia. The current 14% discount represents a great entry point for the long term, we think, even if in the short term the pandemic might lead to some rocky periods for markets. We note that at the time of writing, China is easing restrictions on economic activity, indicating they may be over the worst of the crisis already.

While Alibaba and Tencent have become staples in most regional portfolios, not all managers had the foresight to buy into them in 2013 and 2014 when emerging markets were in the doldrums and the businesses at early stages. We think this is testament to the strength of the analyst team and the long-term view taken in the stock selection process.

Matthew’s thirty-year experience is a key advantage for shareholders. His career has coincided with the rapid development of countries like China, meaning he has seen the paths that successful countries travel and that others are trying to follow. He has also seen numerous crises and how companies have reacted and adapted.

In our view, given the volatility in Asian emerging markets, of which the coronavirus is just the latest example, a stock-picking strategy is essential. Over the long run, however, we believe high quality companies should generate strong growth from the secular changes in Asia, and we think SDP is well positioned to continue to find them.

bull bear
One of the most experienced active fund managers in the market supported by an extensive local analyst team The discount is narrower than its long-run average
Strong long-term performance record thanks to successful stock-picking There is no board commitment to maintain or grow the dividend
Prudently managed, with quality criteria used for stock selection and modest levels of gearing The coronavirus pandemic could lead to losses in the short term
Continue to Portfolio

Fund History

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....
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