Trustnet Magazine 61 April 2020 | Page 48

In focus 48 / 49 Trust pick Asia & emerging markets While Edelsten has been cutting back in the US, he has been upping his weighting to Asia, which now stands at around 25 per cent of his portfolio. Much of this is in Japanese companies, accounting for 17 per cent of the portfolio, compared with 6 per cent for the benchmark. “With parts of China and Japan set to reopen, this is a dramatic difference compared with the US and Europe,” the manager explains. In selling the US in favour of Japan, he says he is buying shares that are “considerably” cheaper. “The slide in markets has certainly meant companies are a lot cheaper than they were,” adds Hugh Young, manager of the Aberdeen Standard Asia Focus trust. “However during my 30-year career I’ve learnt not to focus solely on the price. “We’ve identified opportunities around the region where share prices are attractive and the management, balance sheet strength and business model are also compelling. “Importantly, they’re in good shape to weather the challenges ahead and capitalise on opportunities.” Edelsten went into the crisis light in emerging markets as he couldn’t find much value, a stance he has maintained. “Some emerging markets are going to find this very hard indeed,” he adds. “Places like India and Brazil are going to prove difficult to lock down.” PERFORMANCE OF TRUSTS VS INDEX Name 1yr (%) 3yr (%) [ SECTOR PROFILE ] 5yr (%) 10yr (%) Scottish Mortgage 12.7 59.68 123.51 434.22 Fidelity European Values 0.27 22.26 38.51 140.71 Pacific Assets -25.87 -10.19 5.56 98.39 Schroder Income Growth -20.17 -13.64 -4.51 81.63 MSCI World -5.83 6.77 40.45 131.19 Pacific Assets Pacific Assets is Lowcock’s trust pick for this area, which he says is because more than half of the portfolio is invested in emerging Asia. “The managers have a clear, robust and differentiated investment approach,” he adds. “They seek 30 to 60 stocks capable of delivering sustainable and predictable growth through their pricing power, franchise strength, and limited regulatory oversight, though management integrity is of utmost importance.” The trust is up 5.56 per cent over five years, compared with 25.96 per cent from its IT Asia Pacific sector. It is on a discount of 7.96 per cent, which is significantly wider than its one- and three-year averages. Source: FE Analytics TRUSTNET trustnet.com