Schroder Asia Pacific beats benchmark – Schroder AsiaPacific Fund has published its annual report for the year ended 30 September 2017. The NAV total return was +23.2% over the twelve months to end September 2017. This was ahead of the performance of the benchmark, the MSCI All Country Asia ex Japan Index, which was up +18.8% over the same period. The directors are recommending the payment of a final dividend of 5.60p for the year ended 30 September 2017, an increase of 17.9% over the 4.75p paid in respect of the previous financial year.
The manager says that the main contribution to value added has been stock selection in China, Indonesia, Hong Kong, Korea and Taiwan. The only significant market where stock selection lagged was in India. At a sector level, stock selection was particularly helpful in consumer discretionary, industrial and information technology sectors. Country allocation was of little impact, with the added value from the underweighting in Malaysia offset by the overweight position in Hong Kong.
The manager believes that “China remained an important determinant of sentiment. Although the external environment was supportive to trade growth, the economy has not shown the same pick up in momentum evident elsewhere. To an extent, this has been a deliberate thrust of policy on the part of the Beijing authorities, reflecting confidence that the stimulus measures taken in late 2015 could be withdrawn without undue threat to all important “stability”. Consequently, monetary conditions gradually tightened through the summer, augmented by policies to rein in the residential property market and greater regulatory scrutiny of unorthodox financing vehicles and off balance sheet exposures in the banking sector.
In the event, the gentle tightening in China has done no harm to local market returns, although a large measure of the outperformance has been thanks to a strong showing from a relatively small number of large capitalization internet stocks. Taiwan and Korea have been the other strong performers, with the higher export exposure favouring returns. In contrast, more domestically oriented markets such as the emerging ASEAN markets did not perform well.”
SDP : Schroder Asia Pacific beats benchmark