Scottish Oriental Smaller Companies is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security or securities discussed.
Please see the important information by following this link or at the bottom of the page.
Scottish Oriental Smaller Companies Trust (SST) aims to generate capital growth from a portfolio of Asian ex Japan smaller companies which are selected for their long-term growth potential. Manager Vinay Agarwal looks for high quality companies trading on attractive valuations and aims to hold them for three years at a bare minimum, but ideally for much longer.
Vinay took over in 2016 and has revivified the portfolio, accelerating the concentration of holdings initiated by previous manager, Wee-Li Hee, and increasing the focus on a new generation of businesses with strong competitive positions in growing markets. Downside risks are a key consideration. Vinay takes an absolute return mindset to investment, in other words aiming to limit the loss potential even in down markets. The trust is running a cash weighting of 7.7% as Vinay thinks valuations are too high to justify being fully invested, and the trust has been net cash ever since he took over management.
Although performance hasn’t reached the heights of the early 2000s and 2010s, when the trust generated 23% a year for investors (over the ten years to 2013), SST has managed to outperform the MSCI AC Asia (ex Japan) Small Cap Index over the past five years despite the disruption of a number of management changes between 2013 and 2016 and the retirement of two long-standing team members. The Trust also managed to outperform in the falling markets of 2018, testament to the value of the manager’s quality-focused investment thesis.
The objective of the trust is to grow capital, and so dividends are not explicitly targeted. That said, we understand the board is keen to at least maintain the dividend and it has held it at 11.5p for the past six financial years, making use of the revenue reserve to do so. The yield is currently 1.2%.
SST’s discount has been stubbornly wide in recent years, over a period in which - unusually - small caps have underperformed large caps in the region. This discount may also be the result of lingering uncertainty over the management of the trust from 2013 to 2015, as well as underperformance in 2017 when China and more momentum-driven strategies outperformed. The trust is now trading on a 12.6% discount compared to an AIC Asia Pacific ex Japan sector average of 4.8%.
Important Information
Scottish Oriental Smaller Companies is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security or securities discussed.
Please see the important information by following this link or at the bottom of the page.
Kepler Partners is not authorised to market products or make recommendations to Retail Clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.
If you are unclear about any of the information on this website or its suitability for you, please contact your financial or tax adviser, or an independent financial or tax adviser before making any investment or financial decisions.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. Persons who access this information are required to inform themselves and to comply with any such restrictions. In particular, this website is exclusively for non-US Persons. The information in this website is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of US Persons.
This is an information-only document derived from publicly available facts. It does not, and is not intended to, constitute investment research or marketing.
No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s conflict of interest policy is available on request.
Past performance is not necessarily a guide to the future. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that Independent financial advice should be taken before entering into any financial transaction.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is a limited liability partnership registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority.
Fund History: Scottish Oriental Smaller Companies
More Research
We discuss how the global resources of JPMorgan Asset Management have bolstered the performance of JPMorgan Emerging Markets Trust...
For several years, quality as an investing style has dominated, outperforming both value and growth. We examine why the case for quality remains strong and the importance of taking an active approach…
We examine the AIC's revised sector classifications and discuss whether further improvements could be made...
The world’s developing markets may look and feel like large emerging markets, but they bring something new for investors. The team at BlackRock explain why…
