Schroder Oriental Income (SOI)

Richard Sennitt, manager of Schroder Oriental Income (SOI), looks to utilise the full global resources of Schroders to construct a relatively concentrated portfolio of predominantly large-cap Asian equities, designed to generate an attractive and growing income over the long term. Richard seeks out quality companies that are generating good free-cash flow and are trading at attractive valuations, akin to what investors may consider a traditional equity income approach. This helps differentiate the trust from the peer group that has increasingly leant on more novel approaches to balancing income and capital growth (see Portfolio).

The manager builds the portfolio predominantly from the bottom-up, meaning he has the flexibility to allocate to or away from certain countries depending on where he sees the opportunities. Richard continues to have an underweight to China, whilst having a notable overweight to Singapore, primarily due to a bias towards the financials industry.

Both the overweight to financials and good stock selection have contributed positively to Performance in the past year, although this was offset by the underweight to China that rallied on the back of stimulus measures. Despite this, the trust has delivered strong, long-term outperformance of its benchmark, primarily driven by stock selection, whilst also offering a better income profile than the index.

This can be seen in the current yield of c. 4.3%, versus the index of 2.9%. Meanwhile, the Dividend has been increased for 18 consecutive years, with ample reserves in place to help support this if necessary. The trust was awarded Kepler’s Income Rating for 2025.

Despite the strong long-term track record, the trust continues to trade at a Discount to NAV. Whilst this is currently in line with the five-year average, the trust has traded at a small premium to NAV prior to this, demonstrating appetite for the strategy in more positive market backdrops.