Schroder AsiaPacific (SDP)
21/05/2024
Results analysis from Kepler Trust
Intelligence
Schroder AsiaPacific (SDP)
has released its interim results for the period ending 31/03/2024.
Over the period, the trust saw its NAV increase by 5.7% on a total
return basis, ahead of 5.3% for the trust's benchmark, the MSCI AC
Asia ex Japan Index. The AIC Asia Pacific sector delivered a
weighted average return of 7.9% over the same
period.
Relative performance has
primarily been driven by good stock selection. Highlights include
the allocations to technology firms particularly in Taiwan.
Philippines, Indonesia and Hong Kong all provided positive stock
selection also.
However, an overweight
allocation in Hong Kong detracted from performance. Similarly,
whilst their Indian holdings performed well, the underweight
position impacted relative returns.
The underweight allocation to
China did contribute positively as the country struggled. The
country's difficulties have contributed to the region
underperforming global markets over the period and adding to
negative sentiment towards the region.
Despite the relative
outperformance, the discount on the shares widened. The board
continued to undertake share buy backs with over 3.5m shares bought
back in the period.
Chair James Williams
commented on the changing outlook saying "the outlook is again
better positioned for [Richard and Abbas] to find opportunities to
capitalise on the current conditions."
Kepler View
Schroder AsiaPacific (SDP)
managers Richard Sennitt and Abbas Barkhordar have navigated the
challenging period covered by the interim statement well and have
delivered another period of outperformance, contributing to
long-term relative returns.
Positives in the period have
come from the managers' tech holdings as well as the underweight
position in China which has struggled due to a range of factors and
contributed to SDP's outperformance.
Both allocations are examples
of the managers' stock selection approach which has again been a
major driver of performance. This has also come from less
mainstream markets such as the Philippines and Indonesia. We
believe this demonstrates the strength and depth of the research
capability supporting Richard and Abbas.
There have been some
drawbacks to relative performance, most prominently from an
underweight in India. Whilst it is still one of the largest
absolute allocations, the slight underweight has been a drag on
relative performance. Furthermore, the managers have an overweight
position in Hong Kong which has hurt. This has offset some of the
risk of being underweight China, though stock selection was still
positive in Hong Kong. The managers believe that the negativity
towards China has been priced into stocks though, which could offer
some investment opportunities. We note that there has been a strong
rally in the region following the period end.
Despite the outperformance
and subsequent rally, the discount has remained wide. We believe
the current level isn't representative of the managers' stock
selection capability, nor does it reflect the NAV performance. As
such, we believe the current level could be seen as an attractive
entry point for long-term investors.
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