SDP: Strong Returns From Established Asia Specialist
Edison | Aug 11, 2017 05:51AM ET
Schroder Asia Pacific Fund (BS:SDPl) invests in markets across the Asia Pacific region (excluding Japan) with the aim of achieving capital growth. Managed by Matthew Dobbs since launch in 1995, the trust is the largest and among the most liquid in its peer group. It has produced top-quartile NAV total returns over one, three and five years, also beating its benchmark MSCI AC Asia ex-Japan index over one, three, five and 10 years in both NAV and share price terms. In spite of this, it trades at a wider discount than the peer group average. The manager focuses on companies with visible earnings growth, strong management, sustainable cash flows and valuation support. While sector and geographical weightings are an output of stock selection, there is a significant allocation towards Greater China and the information technology sector. Reflecting the growing level of dividends from Asian companies, SDP has a yield of just over 1%.
Investment strategy: Four-step bottom-up process
As well as travelling frequently to the region to meet companies, SDP’s manager can draw on the extensive Asia-based analyst team at Schroders (LON:SDR) to help generate ideas for the portfolio. The investment process is based on four characteristics: knowledge (idea generation and company meetings), insight (fundamental and valuation analysis), discipline (constructing a portfolio of 70-90 stocks) and conviction (monitoring to ensure all holdings still deserve their position).
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