Page 7 - DIY Investor Magazine | Issue 32

The investment trust structure allows us the flexibility to invest in these early stage companies. It also allows us to invest in markets where there may be less liquidity, but where there are higher growth companies, such as Vietnam.
With this in mind, we have been extending our analyst coverage of private companies to uncover new areas of interest.
THE IMPORTANCE OF DIVIDENDS
Technology is now the largest overall sector weighting in the Trust. However, 2021 showed the importance of a balance of sectors. There were times when high growth companies were in favour and other periods when more traditional companies were preferred.
For example, 2021 was a strong year for Pacific Basin Shipping, which did well as trade resumed. The Trust has proved relatively defensive, capturing less of the downside as markets have fallen, while still participating in the growth of Asian markets over the period. This is how the Trust has been designed and is an important tenet of the abrdn process.
Dividend payments are an important part of this defensiveness. They increase the appeal of the Trust for shareholders, but also provide some security of return during turbulent times.
‘THE ASIAN SMALLER COMPANIES MARKET ALLOWS INVESTORS TO CAPTURE ‘NEW’ ASIA’
ENCOURAGING PARTICIPATION
The Trust has also made changes to ensure that retail investors can participate fully in the growth of Asian smaller companies. The 5:1 share split should allow investors to buy in smaller chunks, while a performance-linked tender offer will be triggered if the Trust under performs the MSCI Asia ex Japan Small Cap index over five years.
The Board believes this should help address the discount to NAV on the Trust. A final change is a reduction in the running costs for the Trust with an amended, tiered management fee. Currently set at 0.96% of market capitalisation, this will drop to 0.85% for the first £250 million, 0.6% for the next £500 million and 0.5% at £750 million and above.
The Asian smaller companies market allows investors to capture ‘new’ Asia – its innovation and structural changes.
The Trust has been re-invigorated to ensure that it is in the best possible position to harness these opportunities and for the broadest possible range of investors to benefit.
Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
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DIY Investor Magazine · Feb 2022