Schroder Oriental Income caps performance fee – Schroder Oriental Income Fund Limited has announced that its manager has agreed to reduce the cap on the performance fee payable to it from 1.00% to 0.75% of the net assets calculated at the end of any one accounting period, effective from 1 September 2017.
The news came as Schroder Oriental Income announced its results for the year ended 31 August 2017 which showed that the NAV per share generated a total return of 20.6% in the financial year, building on the gain of over 32% the prior year. The share price followed suit, returning 20.7%. However, the company has underperformed the wider Asian equity markets this year, the benchmark returned 25.8%. Total dividends of 9.20 pence per share for the year ended 31 August 2017 represent growth of 8.2%.
The manager says that the biggest single factor behind the underperformance this year has been the underweighting and stock selection in China, and more particularly the very strong returns from large cap internet stocks which, with minimal, if any, dividend yield, are never likely to feature largely in an income portfolio. Furthermore, a number of markets with relatively low dividend yields (Korea being the most notable) performed well, and in distinct contrast to higher yielding markets such as Thailand and New Zealand. Unfortunately, in a long report, this was all the manager had to say about the portfolio, there was no mention of individual stock performances. The chairman did say “Neither your Board nor the Manager makes any apology” for the performance, believing that the long term track record demonstrates the value of the investment approach.
SOI : Schroder Oriental Income caps performance fee