Pacific Assets (PAC), the £450m Asia Pacific fund rocked by the departure of its fund management team led by David Gait last August, stalled last year with zero growth in the portfolio, annual results have revealed. The 0% total underlying return in net asset value in the 12 months to 31 January lagged the 28.6% sterling rise in the MSCI AC Asia ex Japan index. “This disappointing outcome places the company at the bottom of its peer group over most longer time periods and remains a central concern for the board,” the company said. Its board launched a strategic review after Australia’s First Sentier closed Edinburgh-based Stewart Investors in October, where Tait’s team had worked, and moved responsibility for the trust to FSSA Investment Managers, another of its subsidiaries. Today PAC said it would announce the conclusion of that review in a few weeks, saying it had “received interest from a large number of high-quality management groups, including FSSA”. In light of the review, chair Andrew Impey said FSSA had been restricted to making minor changes to the portfolio.
Richard Williams, senior analyst at QuotedData, said: “The departure late last year of key portfolio managers, followed by the transition from Stewart Investors to FSSA, inevitably constrained decision-making and reduced conviction in portfolio changes in the latter part of the financial year (with the board-imposed limit on portfolio turnover during the transition further restricting the ability to adapt to rapidly evolving market conditions). The outcome of the strategic review, which has considered a new manager or combination with another company, is expected in weeks and cannot come soon enough.”
Scottish Oriental Smaller Companies (SST), the £300m stablemate to Pacific Assets, is bracing itself for a 25% conditional tender offer after falling to a half-year loss. A 2.3% drop in net asset value in the six months to 28 February compared with the 16% gain from the MSCI AC Asia ex Japan Small Cap index. This “disappointing outcome” offsets earlier outperformance and leaves the company likely to underperform its benchmark over five years to 31 August, triggering a tender that will let shareholders sell up to a quarter of the company’s shares at close to NAV. The trust, which is managed by Martin Lau and Sreevardhan Agarwal of FSSA Investment Managers in Hong Kong, stands on a 10% discount and is the worst-performer of three in its sector with a 36.1% total shareholder return since 30 April 2021. The managers said their weighting to consumer companies was unable to keep up with the rally in technology and other cyclical stocks. Among the hits to performance was the derating of shares in DPC Dash, the franchisee of Domino’s Pizza in China, after its sales growth stalled.
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