Scottish Oriental Smaller Companies (SST) underperformed its benchmark by over 26% in the year to 31 August. The £280m investment trust, which announced a strategic review a month ago after cancelling a 25% tender offer due to shareholder pressure, reported an underlying investment loss of 6.5% compared to the 19.8% gain for the MSCI AC Asia ex Japan Small Cap index. Shareholders, who include discount hunter  City of London Investment Management with a 17.4% stake, suffered a 7.9% total loss as the share price discount to net asset value widened to 11%. The shares have fallen about 10% since the tender was stopped. Chair Jeremy Whitley called it “a poor result, both in absolute terms and against the benchmark”. First Sentier fund manager Sreevardhan Agarwal blamed heavy exposure to consumer stocks and to India, Indonesia and the Philippines, which meant missing the technology rally in Taiwan and Korea. He has since added Korean and Taiwanese technology names such as Realtek Semiconductor and Park Systems. It sold consumer holdings including Whirlpool of India and Unilever Indonesia.

Matthew Read, senior analyst at QuotedData,said: “These are a disappointing set of results for Scottish Oriental shareholders. The portfolio’s longstanding bias towards consumer businesses in India and Southeast Asia, at the expense of technology and industrials in Korea and Taiwan, has proved costly in a market heavily driven by the AI theme. However, the managers have been making substantial changes, with technology exposure almost tripling to 33% and a new 12% allocation to Korea. Although there have recently been disruptions to the AI story, this trend still appears to have a long way to run and SST is now positioned to participate more fully in this. In the meantime, the more pressing question is what happens to the trust itself. With the five-year performance-related tender offer having been triggered but not implemented while the board conducts a strategic review, we await the board’s findings. With obvious concerns around scale, liquidity and performance, we continue to think that consolidation is a distinct possibility.”

Regional REIT (RGL), the regional office fund valued by the market at £142m but with a 101-property portfolio worth £516.6m, made further progress on cutting debt in the third quarter to 30 September. Property sales of £8.9m and £32.2m year to date at an average 11% below book value reduced gross borrowings to £233.1m from £266.2m at the end of last year with net loan-to-value (LTV) to about 38.5% from 40.4%. The company is confident of refinancing its £103.7m facility, due December 2027, well ahead of maturity. RGL signed 26 new lettings bringing in £2m of annual rent in 2026, but occupancy slipped to 74.1%, leaving about 26% vacant. A 2p per share quarterly dividend was declared in line with the reduced 8p annual target. Fund manager Stephen Inglis cited “a structural supply and demand imbalance for attractive, sustainable office space with EPC A and B ratings”. The shares are down about 19% this year and 85% over five years.

Richard Williams, senior analyst at QuotedData, said: “RGL continues to make progress in strengthening its balance sheet, although the challenging regional office market is still weighing on operational performance. Disposals have helped reduce LTV below 40%, however the average 11% discount to book value achieved on these sales highlights the trade-off between reducing debt and protecting asset values. On the operational side, lease renewals at 5.6% above estimated rental value (ERV) and tenant retention of 71.8% are encouraging, but occupancy remains stubbornly low at 74.1%. Meanwhile, the group’s cost of debt has risen from 3.3% to 4.1%, adding pressure to earnings. With a significant refinancing due by December 2027, continued progress on disposals and occupancy will be important in putting the recovery on a firmer footing.”