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.

CLICK HERE TO READ THE FULL REPORT 

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.