27 November 2023

Ashoka WhiteOak Emerging Markets Trust plc

(the "Company")

Monthly Update - October 2023

The Company's monthly factsheet as at 31 October 2023 is now available: https://awemtrust.com/factsheet/

The Company has delivered a NAV total return of -0.18% since inception (3^rd May 2023) to 31 October 2023, outperforming the benchmark MSCI EM² (in sterling terms) by 174bps over the same period. Among other factors, outperformance was led by positive stock selection in small-caps. For the month of October 2023, the NAV was down 2.7%, outperforming the benchmark by 62bps.

Key Contributors

Key Detractors

Source: Factset. Past performance does not predict future returns. The performance calculation is based on GBP. Currency fluctuations will also affect the value of an investment.

¹ The proceeds raised from IPO were substantially invested as at 30 June 2023.

² Benchmark index - MSCI Emerging Markets Net Return Sterling (Bloomberg ticker: MGEF)

 Past performance cannot be relied on as a guide to future performance.

Key contributors

Senco Gold is the leading jewellery retailer in Eastern India with a strong leadership position in its home state of West Bengal. The key drivers include - (1) continued formalization of the large (US$70 bn+) Indian jewellery retail market; the unorganized sector still has a 60% market share; most well-run organized national and regional chains continue to gain share from the unorganized players on the back of trust, design and aggressive store expansion, (2) advantageous competitive positioning; apart from Titan, Senco is the only other player in the industry to have a well-established franchisee model - this aids quicker expansion and shores up the ROCE profile, and (3) a solid, eager-to-learn and ever-improving management team led by Suvankar Sen, the son of the founder Shankar Sen. Senco was also among the early adopters of IT infrastructure across the supply chain (for artisans, franchise partners, store and inventory management), which has led to an improvement in operational efficiency.

Dodla Dairy is a leading dairy company in South India with strong brands, a well-developed direct procurement network and a healthy portfolio of value-added products from which it derives most of its revenues. Premiumisation is likely to be a key driver of the organized dairy sector's growth, and well-run companies in the private sector, such as Dodla Dairy, will benefit from this long-term tailwind. Dodla Dairy has the third highest procurement amongst the dairy companies in the private sector. The recent operational performance was strong given the onset of the Flush (milk producing) season, leading to favourable movement in milk prices and larger procurement volumes of milk. This factor could have contributed to the recent stock price performance.

Qualitas Controlodara is the leading automobile insurer in Mexico, with nearly 35% market share. At 95.3%, its combined ratio is among the lowest in the Mexican Auto Insurance segment. Qualitas has held onto a 30%+ market share in Mexico's Auto Insurance segment for almost a decade, with a 40%+ market share in the fast-growing Trucks and Commercial Vehicle Segment. Qualitas has built a strong moat with its brand, easy claims process, and large fleet of third-party agents. In addition, Qualitas's foray into health insurance and expansion into other Andean countries like Peru provide future growth optionality. The operating performance has recently improved with a 9.2% Return on Invested Portfolio (9M23), compared to 1.6% during 9M22. The positive momentum in operating performance has been one of the contributing factors to the recent stock price performance.

Key detractors

Richemont is the world's third-largest luxury group, behind LVMH and Kering. Globally, the luxury market is consolidating in favour of the top brands and players, which are more profitable and resilient than smaller brands and are growing faster. There is a structural transition from unbranded to branded jewellery in the Luxury Jewellery segment, where Richemont has a 20% market share. Over the last 15 years, the business mix has shifted towards jewellery compared to watches, DTC (Direct to consumer) vis-à-vis wholesale and, most importantly, towards Richemont's top brands Cartier and Van Cleef, which now represent 85% of profits and ~90% of value. Both brands have a strong heritage and are steadily gaining market share, while the operating performance of these brands has been in line with Hermes and LVMH's Fashion & Leather Goods (F&LG) division, which are considered best-in-class. Like the rest of the luxury brands, Richemont derives a significant portion of its revenues from emerging markets, especially China. Richemont and other luxury stocks have pulled back as luxury spending in Europe and the US normalizes from the highly elevated levels seen over the last two years. The recovery in China since Covid restrictions were removed has also been slower than expected.

AIA is a Hong Kong-listed insurer with a presence in multiple emerging markets, including Hong Kong (35% of Embedded Value or EV), Mainland China (18% of EV), and Thailand (12% of EV), along with a growing presence in other ASEAN countries and India as well. AIA is primarily an agency-driven business with a focus on selling protection products. In partnership with South Africa-based Discovery, AIA launched 'AIA Vitality', bringing its successful health insurance and loyalty program to its Asian markets. AIA maintains a prudent investment portfolio with 72% of the book in fixed-income securities (37% of which is in government bonds), while BB and below rated securities make up just 3% of the portfolio. The company's focus to return excess capital to shareholders is noteworthy, with USD 5.8bn returned in 2022. However, operational performance was likely affected by slower than expected economic rebound in China, which contributed to weak stock price performance.

Budweiser Brewing has a 40% market share in the premium and super premium beer categories in China (85% of EBITDA) on the back of its leading brands like Budweiser, Corona, Hoegaarden, Blue Girl etc. It also has a market-leading position in Korea (15% of EBITDA). As has been observed globally, most beer markets tend to premiumize over time, resulting in a moat for breweries that can manage brands well. This has also been the case in China over the last 5-10 years. In the most recent quarter, the flagship Budweiser brand (a premium brand in China) grew 20% yoy while super premium brands grew 35% yoy. However, operating performance in Korea was weak because its largest competitor, HiteJinro, launched a new brand. Consequently, the company had to increase its marketing spend. In summary, the company continues to perform strongly in its main business of China even as it faces a challenging year in Korea.

About Ashoka WhiteOak Emerging Markets Trust plc

Ashoka WhiteOak Emerging Markets Trust plc (AWEMT) is a UK investment trust seeking to achieve long-term capital appreciation primarily through investing in a multi-cap portfolio of equities that provide exposure to global emerging markets. Advised by White Oak Capital Partners Pte. Ltd, founded by Prashant Khemka with leading Emerging Markets investment experience. White Oak Capital Group has delivered an exceptional track record for its other strategies, and has £4.9 billion in assets under management or advisory⁴. Analytical approach integral to disciplined research process underpinned by proprietary frameworks OpcoFinco™ for valuation and ABLEx^TM for ESG research. The team at WhiteOak believes that emerging markets present potential for higher alpha. EM markets remain under-researched and inefficient. AWEM leverages WhiteOak's investment approach to capture the higher alpha potential in these markets. No fixed management fee. Manager remuneration is aligned with alpha generation and hence shareholders' interest. The Investment Manager is remunerated solely as a function of outperformance over the benchmark.

⁴ Data as at 31^st Oct 2023. AUM data refers to aggregate assets under management or investment advisory for WhiteOak Group.

 Further Information

For further information on the Company's investment strategy and portfolio construction approach as well as details of the portfolio market cap, regional and sector composition please refer to the latest factsheet.

Investment Objective

To achieve long-term capital appreciation, primarily investing in equity and equity-related securities that provide exposure to global emerging markets.

Summary of Investment Policy

The Company shall invest primarily in securities admitted to trading on any stock exchange (which may include stock exchanges in Developed Markets) that provide exposure to companies that are domiciled in Global Emerging Markets (EMs), or that are domiciled in Developed Markets but at the time of investment, derive a majority of their economic value, revenues or profits from, or whose assets or cost base are mainly located in EMs.

The Company's LEI is 254900Z4X5Y7NTODRI75

For further information:

Company Secretary

WhiteOak Capital Partners Pte Ltd.

Ellora Partners

Buchanan