Like many other investors I've been looking for better homes for my cash recently. With bank rates at 0.5% and even the best savings accounts looking pretty mean, and with sterling looking weak, I was tempted by Asian Income funds - many financial advisers' big bet for this year.

However, when I looked at the investment trusts in the sector,  I discovered that they were both trading at a premium to net assets. Aberdeen Asian Income (LON:AAIF) is now trading at a 3% premium, Henderson Far East Ltd (LON:HFEL) at 2%, and Schroder Oriental Income (LON:SOI) at par. Now one of the big advantages of buying an investment trust is that usually, you're picking up the assets at a discount. (There's actually a good reason for at least a small discount, since there would undoubtedly be an administration fee on any liquidation.) Looking for trusts which sit on too large a discount, and where you think the discount might close up, can be highly profitable - like looking for low PE stocks which you think might be rerated.

On the other hand, I was now being offered the chance to buy some Asian shares at a few percent more than they were worth. That didn't seem like a particularly good deal to me. So I broadened my search to all the Asian investment trusts. And what I found was intriguing. If I didn't include the word 'income' in my search, I could find trusts trading on a 10-15% discount to assets. For instance Aberdeen Asian Smaller (LON:AAS) trades at a 17% discount to assets, and although the yield is only 1.1%, it's still paying out. Compare the Aberdeen All Asia It (LON:ABAA) trust - run by the same management stable; it's paying a yield of 3.41%. That's still only moderate in terms of yield investments. My bet is that I've got a very good chance of seeing the discount close up from 17% to nearer the 8% average for Asian funds - and that would give me a 10% return on my investment, which more than makes up for the lower yield. (It's interesting to note, for China-sceptics, that Aberdeen funds tend to have the lowest exposure to China in the sector, at only 25% or so compared to Henderson's nearly 50%, according to figures calculated by WINS' investment trust…

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