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Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Schroder Oriental Income. 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 Oriental Income (SOI) invests in high-quality Asian businesses which are paying (or have the potential to pay) an attractive dividend. Manager Matthew Dobbs helped launch the trust in 2005 in order to take advantage of a growing dividend culture in Asia. The trust has since generated strong dividend growth, and – as we discuss in the Dividend section – currently yields 4.4%.

Thanks to the presence of highly cash-generative technology stocks in Asia, the trust offers diversification to the typical sectors heavily weighted by UK equity income investors. Stocks such as TSMC and Samsung offer exposure to secular growth stories which contribute to SOI’s differentiated total returns, as well as attractive and growing dividends.

Matthew draws on the work of a large analyst team spread across Asia, which – alongside his 30 years of experience in the region – gives him an advantage in identifying high-quality companies. Notably, the analyst team are tasked with finding high-quality companies first, with Matthew then selecting those offering the attractive dividend prospects.

Over the past five years the market has been led by non-dividend paying internet retailers (Alibaba, Tencent), which has created a stylistic headwind. In the same period, however, the performance has been close to that of the index, with periods of significant outperformance. Following the emergence of the coronavirus pandemic, the discount has widened out to 7.3% compared to a five year average of 0%.

Analyst's View

In our view, Schroder Oriental Income could appeal to investors who want a growing income stream, or who want the total return potential that comes from reinvesting and compounding a growing dividend. This could include some investors in drawdown who need their capital to grow while they live off their income. Alternatively, it could include some of those investors at an earlier stage of life who want to grow their investment pot with the lower beta, steadier returns achievable from an equity income product.

For income investors, we think the diversification SOI offers to the typical sources of dividends in the UK Equity Income sector is a key attraction. The UK market is light on tech, but SOI owns a number of companies right at the heart of emerging technologies – such as TSMC, Samsung and Hong Hai Precision. These companies offer strong capital growth potential as well as attractive dividends and are arguably resilient to a turn in the economic cycle.

In our view SOI fully deserves the premium rating which it has historically enjoyed. We view the current 7.3% discount as an attractive buying opportunity; particularly given that, as Matthew says, we may be past the peak of the coronavirus crisis in China and the long-term structural attractions of the region remain.

bull bear
High dividend with strong growth potential Typically trades close to par, so unlikely to interest discount players
Diversifies typical equity income exposures with access to high growth sectors The gearing, although modest, could magnify losses in a down market
Hugely experienced manager backed up with large, well resourced analyst team High exposure to emerging markets which can be volatile
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2024 Kepler Income & Growth Rated Fund

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

Fund History

26 Apr 2024 The best of both worlds
Why Asia offers investors both income and capital growth…
26 Apr 2024 Income options for your 2024 ISA
The compelling alternatives to cash in today’s market environment
14 Feb 2024 Rise of the Machines
We look at some potentially exciting technology themes outside of the AI realm and share ways for investors to gain exposure without the hefty price tag…
07 Feb 2024 Range anxiety
We look at what context we can gain from ten years of discount analysis…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
16 Jan 2024 Fund Analysis
SOI has delivered another year of outperformance and dividend growth…
15 Nov 2023 Why dividend investors should be looking at Asia
Companies in the region offer strong earnings growth and diversification potential...
15 Nov 2023 The Asian century
Failing to invest in Asia means omitting half the global economy from your portfolio…
13 Nov 2023 Results analysis: Schroder Oriental Income
SOI has reinforced its status as an excellent way to access the growing dividend culture in Asia…
21 Jul 2023 Investment trusts: Asia for income
Schroder Oriental Income Fund – a next generation dividend hero...
14 Jul 2023 Asian investment trusts: an abundance of opportunity
Exploring investors’ renewed enthusiasm for Asian equity...
02 Jun 2023 Investing for income in a world of inflation
The attractive alternatives to cash for UK income investors...
23 May 2023 Fund Analysis
SOI’s sector-leading performance is at odds with its unusually wide discount…
21 Apr 2023 Podcast: Trust Issues #14 - Investing for income in Asia
We speak to SOI Manager Richard Sennitt about finding the best dividend payers in the world's largest continent...
16 Dec 2022 Investment Trusts: opportunities in all market conditions
How are current market conditions impacting the Schroders investment trust range?
02 Nov 2022 Fund Analysis
SOI offers access to the long-term income growth story in Asia…
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
31 Mar 2020 Fund Analysis
SOI offers access to the exciting dividend growth story in Asia…
19 Apr 2018 Fund Analysis
A diversified portfolio of Asian equities focused on yield generative companies with a quality bias...
19 Apr 2018 What now for Asia?
We examine battered Asian equities amid talk of a trade war between the US and China...
03 Oct 2016 Fund Analysis
A stockpicking investment trust with a strong track record in the Asia Pacific region, with the same manager at the reins for thirty years...
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