AAS : Better second half for Aberdeen Asian Smaller
The year to the end of July 2014 saw Aberdeen Asian Smaller Companies generate a negative return for shareholders of 4.2%. By contrast the MSCI AC Asia Pacific ex Japan Index returned 7.3% and the MSCI AC Asia Pacific ex Japan Small Cap Index returned 4.6%
Aberdeen Asian Smaller’s net asset value fell by 4.1% and revenue fell too so that the return on net assets was negative 4.1%. The fund moved from trading at a 0.7% premium to a 0.7% discount over the year. The dividend is being maintained at 10p plus a 3p special dividend.
The Chairman’s statement points out that this is the first year of underperformance of the fund relative to the MSCI Indices in the last ten years. The damage was all done in the first half of the accounting year when the fund underperformed the MSCI Asia Pacific ex Japan Small Cap Index by 8.9%. Over the second half though they recovered some of this underperformance.
The manager believes that in the first half of the year their “conservative and long-term investment style went out of favour as markets were driven by fund flows and macroeconomic factors”. Later in the year, although they benefited from the post election rally in India, they underperformed in this market as the rally ” was largely led by low quality companies with high debt levels in capital intensive sectors linked to large turnkey projects” – areas they avoid.
The stock they single out as being the “main laggard” is Giordano International, the Hong Kong based retail group