Investment trust insider on Schroder Asia Total Return – James Carthew: I’ll happily target Asia Pacific ex the pain
Investors are nervous and perhaps with good reason. Where can they turn, given that traditional safe havens such as cash and government bonds offer little or no reward?
Steady income generators, like the renewable energy and infrastructure trusts, should remain in demand. The successful launch of JPMorgan Global Core Real Assets (JARA) illustrates this. Hopefully, it won’t share the fate of JPMorgan Multi-Asset (MATE) of drifting to a discount. There are a lot of other well-established closed-end funds focused on the infrastructure, property and transport assets that will feature in JARA’s portfolio, so it will be interesting to see if it can maintain its momentum.
Investment trusts aiming to invest in companies that can grow regardless of the economic backdrop can hold up relatively well. Here the quality of those businesses, and their ability to generate profits and cash, are likely to be key. Companies with unproven business models are likely to come under pressure and highly leveraged companies may struggle to survive a downturn.
There are also a number of trusts that invest with an absolute return mindset, aiming not to lose money for investors. Some of these, like Capital Gearing (CGT) and Personal Assets (PNL), are issuing substantial amounts of stock, as investors draw comfort from the experience of these funds in previous downturns. Most sit in the Association of Investment Companies (AIC) Flexible Investment sector, but it might also be worth looking at Schroder Asian Total Return (ATR).
It has been six long years since I last wrote about the trust after Schroders took on the management contract from Henderson. The trust has been managed, since the strategy change, by…
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