By the time the concept of speed dating emerged, I had settled down, so the whole idea had passed me by, that was, until last week. In a format more often associated with romance than finance, a small group that included journalists, and analysts such as me, were given the opportunity to sit down with a group of fund managers from Schroders to talk about their investment trusts focused on Asia and the UK.
Over a series of 10-minute, back-to-back sessions, we had the opportunity to quiz them and get their insights on markets, their strategies and the important trends they see, at pace. The setup distilled what might normally be an hour-long discussion into just a few intense minutes, but was very informative, nonetheless.
Much to my surprise, I enjoyed this sort of ‘speed dating’. In the space of an hour, I got snapshots of six manager’s thoughts on their funds and the spaces in which they’re investing. I was also surprised to find that all were very excited about what they had to offer and, not surprisingly, I ended up with much more information than I could use in one article. This week, I thought I’d take the opportunity to introduce and share the insights I gathered on the four Asian funds; and, now that I know them a lot better, I may return to the UK funds at a later date.
First ’date’ with Schroder Japan
First up was, Schroder Japan Trust (SJG), which aims to provide long-term capital growth from listed Japanese equities. SJG is managed by Masaki Taketsume and Schroders’ Japanese equity team, which is based in Tokyo. Taketsume follows a bottom-up, value-driven approach, where he scours the Japanese market for undervalued companies with strong balance sheets and growth potential across. The result is a low/turnover portfolio of around 60-70 stocks, with a distinct bias towards small and mid-cap companies, that has a contrarian style – as Taketsume seeks to exploit inefficiencies in Japan’s under-researched market.
For those not familiar with SJG, its portfolio groups investment ideas into four categories. The first is market misperception; these are companies with improving growth prospects through management efforts, but are underestimated by other investors. Second, is market oversight; these are undervalued companies, especially among small- and mid-caps with strong defendable business franchises in niche product areas. Third, is short-term overreaction; these are ideas that arise from abrupt but transitory events that have pushed valuations of quality companies to unsustainably low levels. The balance of the portfolio is described as best-in-class companies.
Pinakin Patel, an investment director at Schroders who is focused on SJG’s strategy, explained that the portfolio currently has holdings in companies such as Hitachi, Asahi, and Fujikura, reflecting themes of industrial transformation and digital infrastructure, while maintaining underweights in large-cap exporters and financial giants like MUFJ. SJG tends to be underweight regional banks because these have suffered from ‘over banking’ in Japan’s domestic market. It also tends to be underweight ‘TSE growth stocks’ as these tend to “hyper growth but hyper valuations”, as well as stocks that lack specific drivers.
Corporate governance reform remains a key driver in Japan and SJG has exposure to this theme too. SJG’s manager does not require absolute perfection immediately and will invest in companies that are on an improving governance path. For example, the Japanese conglomerate Marubeni was highlighted for its improving shareholder returns and governance standards.
With an active share of around 72%, the trust offers a high-conviction, research-intensive portfolio positioned to capture long-term value from Japan’s evolving corporate and economic landscape. Despite its capital growth focus, SJG, could be of interest to income investors as it pays an enhanced dividend equal to 4% of NAV annually – equivalent to 1% quarterly – and is available at a 10.6% discount to NAV at the time of writing.
Second date with Schroder Asia Total Return
My second ‘date’ was with Richard Sennitt, manager of Schroder Oriental Income (SOI), which aims to deliver sustainable income and long-term capital growth from investing in Asia Pacific ex-Japan equities, including Australia. Sennitt follows a bottom-up, valuation-driven approach focused on identifying companies with strong balance sheets, disciplined capital allocation, and reliable dividend potential. The latter part is key – rather than simply chasing yields, Sennitt looks for companies with both valuation upside and dividend potential. This tends to give the portfolio a bias towards value and quality stocks. Similarly, it tends to have limited exposure to low-yielding growth sectors such as Chinese internet stocks.
The manager explained how there is somewhat of a misconception about dividend levels in the Asia ex-Japan region. Stocks here offer average yields between 2.5 and 3.0%, which, while behind the UK and Europe, is comfortably ahead of the US and Japan, for example. He says that the region benefits from a strong dividend culture, supported by moderate payout ratios and low leverage, noting that dividends often reflect management discipline and governance strength.
The region also outpaces the developed world in terms of economic growth expectations – at just shy of 3.5%, Asia ex-Japan is expected to grow by an additional percentage point per annum versus the rest of the world as a whole over the next five years. This portfolio has exposure to various themes: ASEAN growth, tech leaders, manufacturing excellence, digital connectivity, quality financials and growing domestic consumption. For example, low levels of insurance coverage a strong growth opportunity whilst banks offer reasonable returns and an attractive yield.
SOI also serves as a useful diversifier for investors who derive a lot of their income form the UK. The region benefits from a diverse range of drivers and is particularly cheap versus developed markets at the current time.
Schroder Asia Total Return
My third ‘date’ was with Robin Parbrook, the manager of Schroder Asia Total Return (ATR).
As its name suggests, Schroder Asian Total Return (ATR) aims to deliver long-term total returns by investing in equities across the Asia Pacific region (excluding Japan). The trust operates with an unconstrained, benchmark-agnostic philosophy, allowing portfolio managers Robin Parbrook and King Fuei Lee to build a portfolio based on their highest-conviction ideas, rather than weightings tied to an index.
Parbrook describes the fund as offering something different. To make it into the portfolio, ATR’s managers need to believe in a company’s management team. Reflecting this, you will find not state-owned enterprises as the manager doesn’t believe these are run for the benefit of shareholders and are not good for returns. Similarly, the manager doesn’t favour Chinese or Australians banks, so they do not feature in the portfolio, even if they represent a significant weighting within benchmark indices. However, you will find themes such as tech leadership and innovation, a rising Asian middle class, Indian finance and sensible capital.
To help smooth returns and preserve capital during market downturns, the trust employs tactical hedging strategies, including derivatives. These are not intended to eliminate downside entirely but have proven useful and are a differentiator versus its peers and Asian focused stablemates at Schroders. ATR is able to flex its regional and sector exposures, to exploit inefficiencies in under-researched markets. However, like Schroders other Asian funds, it tends to have a bias towards small and mid-cap stocks as this under-researched segment of the market is where the manager tends to find the best opportunities. It pays one dividend annually and tends to operate with modest gearing with the aim of enhancing returns.
Final date with Schroder Asia Pacific Fund
My final date was with Abbas Barkhordar, manager of Schroder Asia Pacific Fund (SDP), which seeks long-term capital growth through equity exposure across Asia (excluding Japan and the Middle East), but including countries bordering the Pacific. SDP is managed using a bottom-up stock-picking approach, leaning on the regional insights from Schroders’ Asia-based analyst network (it has 45 analysts in the region). The manager looks for undervalued companies that it believes are both high quality and well-governed – for example, they should have a track record of treating foreign minority shareholders well.
SDP maintains a diversified portfolio of around 60 such stocks, taking a longer-term three-to-five-year view. Sector and geographic weightings are determined by conviction rather than benchmark constraints, although where the manager sees strong domestic stories that it likes these will inevitably be reflected in the regional allocations. The fund targets total return rather than pure growth, with typical holding periods of three to five years.
While not explicitly thematic, the portfolio has significant exposure to technology and semiconductor manufacturing, where Asia remains globally dominant through names like TSMC and Samsung. Other key areas include consumer and financial sectors benefiting from rising incomes in markets such as India and Vietnam, as well as structural growth in digital and healthcare inclusion. The manager also noted Vietnam’s increasing importance as a manufacturing hub and investment destination, even though it sits outside the fund’s benchmark; describing it as a big part of the southeast Asia story and one of the most successful economies in the region.
Overall, the portfolio favours resilient businesses with strong competitive advantages and pricing power, capable of weathering macroeconomic headwinds while capturing Asia’s long-term growth potential.
