TIDMSDP
Schroder AsiaPacific Fund PLC
13 December 2023
Schroder AsiaPacific (SDP)
13/12/2023
Results analysis from Kepler Trust Intelligence
Schroder AsiaPacific (SDP) has released its financial results
for the year ending 30/09/2023. Over the year, the trust saw its
NAV increase by 2.9% on a total return basis, versus 1.5% for the
trust's benchmark. The AIC Asia Pacific sector delivered an average
return of -1.4% over the same period.
Outperformance has been driven by good stock selection, and in
part by an underweight allocation to China. The index delivered
positive returns in local currency terms, but was impacted by
translation effects . Regardless, SDP has now delivered
outperformance at an annualised rate of 2.4% over the past ten
years.
The board were active in buying back shares totalling 6m shares
in the year, with a further 1.3m in the period post results, a
total amount equal to 4.7% of the current share count.
The trust declared a dividend of 12p per share, in line with the
amount paid in the previous year. This was fully covered by income
and equated to a yield of 2.5% at the date of publication.
Gearing was 2.1% at the end of the period, supported by a
renewal of a GBP75m revolving credit facility in June 2023.
Chairman James Williams commented on the difficult market
backdrop saying: "It is clear that market conditions in Asia - and
indeed globally - will continue to be volatile ... [but it is] "an
ideal time for our managers' investment strategy which remains
focused on companies with structural and sustainable competitive
advantages trading at attractive valuations."
Kepler View
Whilst the Asian region has been through a period of volatility
over the period covered by the report, managers Richard Sennitt and
Abbas Barkhordar have delivered another impressive year of
performance, with a total return 2.5% ahead of the benchmark and
significantly ahead of the peer group.
The period has seen a series of market gyrations, which has led
to a divergence in returns. In our opinion, this environment is
likely to be beneficial for stock pickers and is a major reason
behind the strong relative performance. Currency translations have
had an impact on performance. In local currency terms, all but two
of the eight major economies in the region had positive returns.
However, when translated back to sterling, these returns were
notably reduced.
The managers were underweight China which contributed to
performance though this was balanced with an overweight to Hong
Kong. This was a headwind albeit offset by good stock selection.
The managers have been adding to both countries selectively. Taiwan
contributed to performance, particularly in the technology
holdings. Stock selection was also positive. The managers like
India, but remain selective. We believe this pragmatic approach is
one of the key drivers behind the consistent outperformance of the
trust.
The trust's shares have remained at a steady discount to NAV
across the year. The board has recognised this and has been active
in trying to stabilise the discount through buy backs which, in our
opinion, is a positive sign to investors.
The trust also reduced the upper tier of the management fees to
0.6% from 0.7%.
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