Asian Total Return has had a poor year but its long term prospects are being overlooked


#1

Whilst it’s not been a great first year for Asian Total Return its strategy as practised by the same manager elsewhere has delivered consistent long t
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#2

“The fund has been challenged by events in Thailand, the slowing of China and the ending and even the threat of ending QE in the USA”

Doesn’t the fact that the investment strategy didn’t manage to cope so well with these challenges reduce confidence that the managers will indeed return to their previous excellent past performance?


#3

Good point @David. It’s like so many hedge funds performed so badly when the financial crisis came on showing that they were just too much like equity funds no.

Still, I think I prefer this trust to those hedge funds, it actually had a good crisis if you look at the numbers. Also, I agree with the point made at the end of the article about all fund managers doing badly sometime, I think it’s normal and I’m happy to cut some slack sometimes for the manager.

I think this is a good fund and this is a good time to maybe think about investing in it. I mean if the discount is bigger than 5% that helps no?


#4

Strategies like these often become stuck at some point but that’s no reason to avoid them in my view. What strategy doesn’t go through a rough patch?

The challenge here is the Aberdeen New Dawn and Pacific Assets are very strong competitors but you pay up for that because of this discount.

I wouldn’t go as far as saying ATR is a no brainer but it is a pretty tempting prospect.


#5

This article is timely, I’ve been considering whether to invest in this or in to Aberdeen New Dawn.

Still not sure which one to go with though the discount is tempting me here. But Aberdeen has a proven even longer term record than the Schroders team.


#6

What is clear to me is that long term growth in the world will emanate from this part of the world rather than our part, so much.

Now, GDP growth doesn’t equate to stock market growth, we should all know this by now. But there will be a lot money made selling things to the Asian consumer.

In this region Aberdeen New Dawn and Pacific Assets have been my preferred means of investing here but looking at Asian Total Return whilst I’m not sure Robin Parbrook’s stock picking skills are as good as the two trust I’ve just mentioned they’re still pretty good. But, what you also get here is their macro overlay, or protection from falling stock markets.

Now, as we’ve recently witnessed it doesn’t always work but if you were invested in another fund in the sector without the macro overlay you would never have any protection at all.

I think a fund like this with a good stock picker and protection in falling markets, all be it one that will only work most of the time is a pretty attractive. I am minded to invest in to it myself. I just need to sell something else first.


#7

I just think this is a bit of a find. I take your point @wickedinvestor about other good trusts but if you look at the performance of the unit trust version of this it’s great. Then if you add in the smaller company benefit (25% in smaller comps) and think how good Scottish Oriental and that Aberdeen smaller company one has done then this looks exciting to me because its got a mix of the Scottish Oriental without going the whole hog. i.e. like not being as risky.


#8

Assuming you plan to invest in a diversified portfolio of funds, this seems like too much of a compromise; none of the benefits of Asia with all the drawbacks of a absolute return. I’m not sure what purpose this vehicle serves - it’s a chronic underperformer, it offers a yield less than the FTSE all-share, it’s on a relatively narrow discount (even bearing in mind the board’s commitment to buybacks) compared to others in the sector, and its focus on absolute returns seems to prevent it from doing what Asian trusts do best; performing well during the good years. Why not invest in a straight Asian equities trust on a 10% discount, and protect yourself on the downside by investing in another (totally different) trust which invests in an uncorrelated sector with a lower risk profile (EG: UK equity income)?


#9

I’m not sure I agree with you there fellow @sparagus. In theory what is attractive about this trust to me anyway is because it’s absolute return I’ve got a little bit more certainly about it’s price 18 or 24 months down the line.

Now we’ve seen it didn’t do great in the year following the switch from Henderson to Schroders but the unit trusts the same guys manager have done better over a longer period.

I get your point about the merit of investing in Asian funds and this not being the same kind of animal but what I compare it to is the return I can get on a cash ISA or even a tracker fund. I have other absolute return funds too and this helps to diversify my absolute return exposure.


#10

Maybe you have a short term investment horizon @londoner and in which case cash is where you should be but your argument in favour of this trust won’t and shouldn’t apply to most investors.

I think this fund has some interesting characteristics and Robin Parbrook is a good fund manager. See his performance record as a manager http://www.trustnet.com/managers/factsheet/robin-parbrook/utoeic/U/00000010RA/

But the issue is that Aberdeen new Dawn and Pacific Assets are soo much better and have been so for many years.

Not sure if that’s what @sparagus is referring to too?