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Today the trust has substantial overweight positions to both financials and technology . The thinking behind these positions is slightly different . With regard to financials , the managers believe that the well-capitalised firms they have exposure to benefit from higher interest rates , as well as increasing penetration of financial services in some markets , such as India or Indonesia . Of particular note here is an overweight position to companies in Singapore , which also provide indirect exposure to the ASEAN region .
Technology is a different story , with the managers believing that holdings , such as the Taiwan Semiconductor Manufacturing Company ( TSMC ), are well-placed for long-term growth . They are also leaders in their fields globally .
It is also worth noting that bracketing holdings into the ‘ technology ’ category can obfuscate the level of diversification that exists among companies in the sector . For example , Indian firms are often more focused on software and outsourcing services , whereas Taiwanese and Korean companies are more skewed towards semiconductors and other hardware , like smartphones or household appliances .
India is also a country that SDP is now almost flat on relative to the benchmark . The managers benefitted from positions in domesticallyoriented companies listed in the country , but cut back those positions in early 2023 to take profits when valuations became inflated .
That also reflects the fact that Richard and Abbas are valuation-conscious , even if they are investing in companies that have greater growth potential . It ’ s an approach that has worked over the long-term as well , with the trust delivering substantial outperformance over the past decade .
Despite this , the trust was trading at a 13.3 % discount to NAV as at 13 / 10 / 2023 . Chaotic though it may be along the way , it is hard to see the Asian growth story disappearing any time soon and so , assuming long-term
“ HOLDINGS , SUCH AS THE TAIWAN
SEMICONDUCTOR MANUFACTURING COMPANY ( TSMC ), ARE WELL-PLACED FOR LONG-TERM GROWTH …”
performance continues to be strong moving forward , then we may see a tightening of that discount as a result .
At their last update , our analysts said : “ The trust is trading at a discount that is significantly wider than its five-year average which may prove an attractive entry point for investors . In our view , a peaking of US rates and a subsequent softening of the dollar would be supportive of the growth prospects of the region and could support the narrowing of the discount .”
Kepler Partners LLP is authorised and regulated by the Financial Conduct Aut registered in England and Wales at 70 Conduit Street , London W1S 2GF with