Pacific Assets (PAC)

Pacific Assets’ (PAC) managers David Gait and Douglas Ledingham look to allocate capital for the long term to the best people and businesses in the Asian region with this relatively concentrated equities trust. The managers have a strong focus on risk, which they consider to be the permanent loss of capital. To mitigate this, the managers look for companies with quality and sustainability characteristics, such as highly regarded management teams with integrity, and operating cash-generative, resilient businesses with solid balance sheets (see Portfolio).

Their approach is purely bottom-up, meaning stocks are bought with no consideration of their weight in the benchmark. This can create a portfolio that is significantly different from peers. At present, the managers have a large allocation to India and very little in China. This reflects the managers’ view of a highly entrepreneurial Indian market and the influence of state ownership in China.

This positioning has led to strong Performance over five years, with PAC significantly ahead of peers and its formal benchmark. Much of the positive relative performance is expected to come in falling markets due to the absolute return mindset. The result of this can be seen in PAC’s calendar year returns, which have been positive in nine of the past ten calendar years, including 2024 to date, versus the market’s five positive years.

Despite the strong performance, the trust remains at a wide Discount to NAV. This has notably widened over the short term as the NAV has gone up, though shares have not kept up. The first buyback in many years occurred in September 2024.