RCS - Schroder AsianTR Inv - Results analysis from Kepler Trust Intelligence

Schroder Asian Total Return InvestmentAnnouncement

20/03/2025 17:00

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RNS Number : 5583B  Schroder Asian Total Retn InvCo PLC  20 March 2025

Schroder Asian Total Return (ATR)

20/03/2025

Results analysis from Kepler Trust Intelligence

Schroder Asian Total Return (ATR) has released its financial results for the
year ending 31/12/2024. In this period, the trust saw a NAV per share increase
of 13% on a total return basis, which compares to 12.1% for the reference
index and 11.7% for the peer group average. ATR has now outperformed in nine
of the past ten years.

The first half of 2024 saw good contribution from tech holdings especially in
Taiwan, whilst the second half saw the Chinese market rally which proved a
drag on performance. Stock selection was a considerable positive over the full
year, notably in Australia and Singapore, with stocks in India and ASEAN also
providing good alpha.

As a result of the strong returns, a performance fee was earned, although this
only paid when the NAV TR is equal or greater than the reference index and
above an annual hurdle.

Gearing was up slightly across the year though varied considerably throughout
and was accretive to NAV. The managers used contracts for difference in
addition to the existing loan facility.

Whilst EPS fell, the dividend was maintained at 11.5p per share, offering a
yield of c. 2.5%.

The discount widened slightly in the year, though still has the narrowest
discount of the peer group. The board authorised considerable share buybacks
to support this. Furthermore, the trust has its triennial continuation vote
due at the next AGM, over which period the NAV has notably outperformed its
reference index.

Chair Sarah MacAulay commented on the managers' experience, stating " they 
are well positioned to navigate diverse and challenging equity markets in the
region" and that they "continue to find exciting investment ideas in the
region and, with an index agnostic investment approach, stock selection will
remain critical."

Managers Robin Parbrook and King Fuei Lee, have overseen another year of
strong performance, capping a strong decade of cumulative and discrete
performance. This has been primarily driven by stock selection, with Taiwanese
tech companies particularly positive as well as the more developed markets
holdings. Whilst past performance is never a guarantee of future returns, we
believe ATR's consistency in varying market conditions is an encouraging sign.

The current positioning is also a differentiator in our view. The managers
split the universe into four clusters which helps provide exposure to, or
arguably more importantly, away from, specific factors versus the reference
index that can help generate long-term alpha. This has arguably been a driving
factor in the outperformance of the past year, despite the volatility.

The gearing level has varied considerably in the year, which we believe
demonstrates the managers' willingness to be active. The managers also use
hedging strategies, which has been a positive contributor and also helps
further differentiate the trust from peers, in our opinion.

The trust trades at a discount, albeit significantly narrower than the peer
group. One potential contributor has been the high level of board support,
which has resulted in significant share buybacks. Considering the managers'
performance track record, and the relatively recent history of trading at a
premium, we believe the current level could provide a compelling entry point
for long-term investors.

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