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Investment trust insider on Schroder Asia Total Return

Investment Trust Insider on Capital Gearing Trust

Investment trust insider on Schroder Asia Total Return – James Carthew: China is not uninvestable, just high risk

Recently, I interviewed Robin Parbrook, co-manager of Schroder Asian Total Return (ATR) after its half-year results. Very few funds investing in Asia trade on premiums above net asset value (NAV) – in the AIC’s Asia Pacific sector, just ATR and Pacific Horizon (PHI).

The trust’s long-term performance record is good – second to PHI over three and five years – but NAV has been fairly flat this year. ATR is smaller than its stablemate, Schroder AsiaPacific (SDP), but still a decent size with a market value over £500m, and its ongoing charges are amongst the lowest in its sector.

What really makes ATR stand out, however, is its investment approach. Returns are driven by a combination of stock picking and hedging of market-specific risks using index futures (not by shorting stocks). The approach is designed to deliver a smoother ride for investors. Parbrook says the trust’s long-term returns exhibit between 60% and two-thirds of the volatility of the benchmark index.

Schroders has an open-ended fund, Schroder ISF Asian Total Return, managed with the same approach, but this is about ten times the size of ATR and therefore constrained from holding smaller companies. This, and the lack of gearing on the open-ended fund mean that it tends to underperform the investment company (by about 1–2% per year)…   read more here

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