Shares in Schroder Oriental Income Fund (SOI) were marked down 1% to 243p on Friday on news of a negative return for a ‘truly unprecedented’ year to August 2020 and the announcement that well-followed manager Matthew Dobbs is to retire early next year.
Cushioning the blow for investors was yet another annual dividend increase from the fund, which was able to draw ‘modestly’ on its revenue reserves.
DOBBS TO DEPART
The driving force behind the £660 million cap trust since its 2005 launch, Dobbs is to retire at the start of 2021 following a long, distinguished career in the fund management industry. His close colleague Richard Sennitt will take over as portfolio manager from 31 December 2020.
For the year to 31 August 2020, Schroder Oriental Income Fund’s share price produced a total return of -3.9%, while the net asset value (NAV) total return for the financial year was -0.9%.
Chairman Peter Rigg commented: ‘In an environment where the rise in regional markets was driven by lower-yielding growth stocks, which do not produce the income the company is targeting, we believe this is a good result.’
The trust once again increased its dividend, dipping into its revenue reserve to cover the 7% fall in revenue earnings per share during the year.
Dividends declared over the year totaled 10.3p and the fund confirmed that its remaining revenue reserves are equivalent to nearly eight months of the dividend at current levels.
Schroder Oriental Income also stressed that the income reduction witnessed in Asian economies had been ‘much more modest than that of the United Kingdom, demonstrating the company’s value as a diversifier away from UK income’.
STRONG TRACK RECORD
Rigg is ‘reassured’ by the subsequent recovery in NAV, which has risen by 6% since the year end, as well as by the company’s strong long-term performance.
Since launch in 2005, Schroder Oriental Income’s share price and dividend have more than doubled, the shareholder reward has increased every year and the number of shares has increased by four-fifths to sate investor demand for the strategy.
