LONDON - Schroder AsiaPacific Fund PLC (LSE:SDP) announced its financial results for the year ending September 30, 2024, revealing a net asset value (NAV) increase of 16.5% on a total return basis. This performance slightly lagged behind its benchmark, which grew by 17.3%, and was marginally ahead of the 15.9% weighted average for the peer group.
The fund's performance was largely attributed to effective stock selection, particularly in the technology sector in Taiwan, which was the most significant positive contributor. Positive contributions also came from holdings in the Philippines and Indonesia, supported by an improving macroeconomic environment. However, stock selection in India did not fare as well, with small and mid-cap stocks underperforming and contributing to a drag on the fund's overall performance. Chinese and Korean stocks also detracted, although the fund's underweight positions in these markets had a positive effect.
Portfolio management strategies included taking profits from strong performers and reallocating investments. Notable actions included reducing holdings in Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and investing in other technology companies like E Ink and ASE Technology.
The fund's managers have cautiously increased exposure to Chinese stocks by adding selectively to high-quality companies at attractive valuations, while maintaining a notable underweight position. They have shown a preference for Hong Kong to balance allocation risks, focusing on companies with strong governance.
The annual dividend for shareholders has been raised to 12.5p per share, equating to a yield of 2.3% based on the share price as of December 2, 2024. Despite the fund's good performance, the discount to NAV widened over the year, prompting the board to undertake significant share buybacks.
Chairman James Williams expressed confidence in the fund's positioning to capitalize on growth opportunities in the Asia Pacific region while carefully managing risks. He highlighted the region's robust domestic consumption, technological innovation, and increasing affluence as drivers of global growth.
The analysis provided by Kepler Trust Intelligence acknowledges the strong absolute returns and the improved outlook for the region. They note the fund's disciplined approach to stock and country exposure, which may present an attractive opportunity for long-term investors, despite the widened discount.
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