Asian Total Return says, during the year ended 31 December 2015, it produced a net asset value total return of 2.9%, compared to a total return of -4.1% by the Reference Index and a total return of -1.8% from the average peer group NAV. The Board has declared a final dividend of 3.80p per share for the year ended 31 December 2015, an increase of 16.9% over the final dividend of 3.25p per share paid in respect of the previous financial year.
Performance was driven largely by the positive contribution from holdings in China, India and Hong Kong, with exposure to some small to mid-cap companies adding to gains. Thailand stocks were the laggards, as were resources names which remained under pressure due to falling commodity prices.
Overall, the Company’s largest holdings delivered some of the best returns, with Taiwan Semiconductor Manufacturing, Wuxi Pharmatech, Techtronic Industries and Tencent recording strong gains on the back of steady earnings growth momentum. Holdings in private-sector Chinese companies such as China Lodging, Shenzhou International and Stella International also saw robust performance driven by rising domestic consumption trends. In Hong Kong, blue-chip names held up well with AIA, HKT Trust and property stocks Hongkong Land and Swire Properties outperforming given their more resilient earnings streams.
Indian stocks held in the portfolio extended their positive performance led by private-sector banks HDFC Bank and Indusind Bank where top-line growth continued to deliver on the back of a pick-up in the credit cycle. Stock specific gains were also seen across domestic names in the healthcare and consumer sectors with Apollo Hospitals, Zee Entertainment and Godrej Consumer Products rising on expectations of a solid earnings outlook.
Across other markets, holdings in Taiwan exporters were mostly down as bicycle manufacturers Giant Manufacturing and Merida Industry, as well as technology companies, retreated on concerns over sluggish global demand. Australian stocks saw mixed returns with gains in healthcare stocks CSL and Resmed offset by losses in resources names BHP Billiton and Rio Tinto.
The largest detractors were ASEAN-centric holdings as stock markets saw broad-based declines on worries over slowing domestic growth, weak exports and depreciating currencies. Thailand’s Kasikornbank came under pressure given concerns over a deteriorating macro outlook, while conglomerate Jardine Strategic was dragged down by weakness across its ASEAN subsidiaries and headwinds from currency translation losses.
Overall, the contribution from capital protection (in the form of put options on the Australian, Korean and Taiwan markets and short futures on the Hong Kong, China H-shares and Singapore indices) was flat as hedging costs were funded by positive payouts during the third quarter. In terms of currency hedges, the hedge on the portfolio’s Australian dollar exposure helped mitigate significant losses as the Australian dollar recorded a second consecutive year of decline, depreciating 11% against the US dollar in 2015. On the whole, the hedging strategies worked well over the year, providing an element of capital protection against overall negative returns for the region.
ATR : Asia Total Return delivers positive return in falling market