Schroder Oriental reports marginal underperformance- Schroder Oriental Income Fund (SOI) reported a net asset value return of 1.5% for the year, while the index reported a return of 1.8%. The dividend for the year did go up from 8.80p in 2017 to 9.40p in 2018 which represents a yield of 3.8% on the share price at the end of the year. In contrast to the robust dividend flow the share price produced a negative total return of -0.6%. This occurred due to the fact that that shares were trading at a small discount compared to NAV of 1.2% at the end of the year versus a small premium of 0.9% at the same time last year. However, during most of the year shares were trading at a small premium and close to NAV at all times, because of this the board approved the issuance of 8,395,000 ordinary shares.
The manager had this to say about the performance of the fund:
“Similarly to the reference index, which produced a total return of 1.8% in GBP terms, the Company’s NAV total return ended the year fractionally in positive territory. Relative performance recovered somewhat in the second half as highly priced/low yielding sectors such as heavyweight internet stocks reversed their first half strength. In country terms, stock selection was strong in China, Taiwan and Thailand, offset by weakness in Hong Kong, Korea and New Zealand. Country positioning was helpful thanks to the underweight in China and Indonesia and overweights in Thailand and Singapore. In sector terms, selection was strong in information technology, telecoms, real estate and consumer discretionary, partly offset by selection in materials and a nil weight in health care.
Hong Kong, Australia and Taiwan remain significant exposures, with a wealth of good quality companies offering attractive yields. Over the year, we added to both China and Korea, which have become appreciable portfolio exposures comprising over a fifth of the Company’s assets on a combined basis. We also added to Japan and Thailand.”
SOI-Schroder Oriental reports marginal underperformance