Schroder Asia Pacific

Schroder Asia Pacific Fund
SDP (LSE)
31 July 2014
Investment Objectives and Management
Commentary
Objectives and Style
Extracts from Quarterly Overview Q2 2014
The fund delivered strong positive returns over the quarter but underperformed
the benchmark, mainly on account of negative stock selection in Korea, China
and Hong Kong. Our holdings in select Korean technology and consumer
discretionary names proved to be a drag on
performance as they underperformed the broader market. Stock selection in
Hong Kong proved to be a detractor, although absolute returns were still
positive, as some of our key, long-term holdings in the industrials sector lagged
market gains. Meanwhile, the fund’s leading contributor to performance was our
positive stock selection in Thailand, where our holdings in financials,
particularly select banks and property developers,
outperformed the market on optimism that the recent army coup will deliver a
sense of stability back to the country’s economy.
Further positive contribution came from our overweight position in India, where
Narendra Modi’s convincing win in the general elections boosted market hopes
of much-needed reforms to boost growth. On the sector side, financial and
consumer staples contributed to fund performance while industrials and
consumer discretionary detracted.
Schroder AsiaPacific Fund plc aims to achieve capital growth by investing in
equities in Asia, (excluding the Middle East and Japan) and the Far East pacific
rim (excluding Australasia). These economies are still relatively immature, and are
expected to grow at a faster rate in the medium term than their western
counterparts. The fund holds a diverse portfolio of shares in companies from
developed Asian economies like Hong Kong, as well as emerging markets in the
region.
Management and Fees
Management Group: Schroder Asset Management
Fund Manager (s): Matthew Dobbs
Matthew Dobbs, who has a degree in History and Economics, has been with
Schroders since 1981, managing the AsiaPacific Fund since 1995. In 1996 he
was seconded to Singapore as Global Regional Managing Director of SIM in
South East Asia and based in London since 1999. He is also responsible for the
Schroder Oriental Income Fund, listed in July 2005.
Gearing
The gearing policy is closely watched by the Board in order to utilise the flexibility
of the current structure to take advantage of, or respond to, market conditions.
As at 30 September 2007 the Company had a revolving credit facility with ING
Bank N.V. of US$100m, of which US$70m was drawn down. The loan is
unsecured and repayable within one year.
Key Data
Price
12m High / Low
Price NZ$
NAV
Prem / (Disc)
Mkt Cap (m)
Gearing Ratio
261p
262p / 223p
$5.19
287p
-8.9%
£442
102%
(gearing = ratio of gross assets to net assets)
Dividend Yield
Distribution dates
1.3%
Jan
MSCI Far East ex Jap
Far East ex Japan
Above Average
30-Sep
UK £
UK
20/11/1995
1.28%
Benchmark
Sector
Risk Rating
Financial year
Base currency
Domicile
Launched
TER (Fitzrovia)
(Post-tax total expenses as a % of NAV)
Exchanges listed
Website
UK
www.schroders.com
Asset Mix
Sector Weightings
Currently Unavailable
Other Comments - as at 31 July 2014
Over the past 3 months SDP has under-performed the MSCI Far East ex-Japan
Index by 1.3% (in NZD terms). SDP is currently trading at a 8.9% discount to
NAV which is in line with the average discount over the past 3 years of 9.3%.
5-Year Performance (NZ$ basis)
Note: All series have been re-based to start at 100.
140
SDP Price
135
SDP NAV
130
MSCI Far East ex Jap Index
125
120
115
110
105
100
95
90
85
80
Aug-09
Aug-10
Aug-11
Aug-13
31-Jul-14
3M
Total Returns*
HK
24%
India
14%
Taiwan
13%
China
15%
As at 30 June 2014
1 Yr
3 Yr^^
10.4%
13.3%
9.0%
9.2%
7.7%
11.7%
9.8%
10.6%
5.5%
4.4%
8.9%
15.9%
4.5%
7.2%
13.0%
10.1%
12.3%
6.0%
3.5%
9.6%
* Assumes dividends are re-invested.
^^3 year and 5 year performance figures have been annualised
Discount to NAV
Cur
Premium / (Discount)
-8.9%
1 yr high
-7.2%
1 yr low
1yr avg
-12.2%
-9.9%
\
% of NAV
3yr avg
-9.3%
Dividend Yield
2014
2013
2012
2011
2010
Dividend Yield
1.3%
1.4%
1.2%
1.4%
1.4%
Top 10 Holdings as at 30 June 2014
Holding
5 Yr^^
MSCI Far East ex Jap : NZ$
SDP : UK £
Sth
Korea
11%
Sing.
6%
6M
SDP : NZ$
MSCI Far East ex Jap : UK £
As at 30 June 2014
Aug-12
Performance
Geographic Weightings
Other
17%
Sector Weightings
With the proportion of stocks with upside to fair value now back to a six-month
low, the search for stocks providing both strong long-term shareholder value
creation and valuation upside is certainly getting tougher.
Description
Taiwan Semiconductor
6.8%
Manufacturer of computer-aided designs integrated circuits, other semiconductor devices & masks.
Jardine Strategic
4.7%
Investment arm of the Jadine Matheson Group
Samsung Electronics
4.1%
A leading producer of memory chips, telecommunications equipment and consumer electronic products.
Hyundai Motor
3.7%
Manufactures and distributes motor vehicles and parts.
Fortune Real Estate Investment Trust
3.2%
The Group's principal activities are owning and investing in a portfolio of retail shopping malls
AIA Group
3.0%
Investment holding company, co. and subsidiaries provide products and services related to insurance etc
China Petroleum & Chemical
3.0%
Energy and chemical company, engaged in Oil and gas and chemical operations in PRC
Tencent Holdings
2.5%
Provides internet and mobile value added services, online advertising and e-commerce in China
Techtronic Industries
2.3%
Manufacturer and distributor of electrical and electronic products (e.g. power tools - Ryobi)
Hankook Tire
2.3%
The company develops and manufactures automobile tires.
TOTAL
28.8%
Sources: Thomson Financial Datastream, Bloomberg, ASB Securities, Trustnet, The Association of Investment Trust Companies (AITC) and published company information.
Disclaimer: The price, value and income derived from investments may fluctuate because values can go down as well as up and investors may get back less than originally invested. Past
performance is not indicative of future results and no representation or warranty, express or implied, is made regarding future performance. Reference to taxation or the impact of taxation does not
constitute tax advice. The levels and bases of taxation may change. Where an investment is denominated in a foreign currency, changes in rates of exchange may have adverse effect on the
value, price or income of the investment.
JMIS, its employees and persons associated with JMIS may hold this security as principal for their own account and/or have provided investment advice or investment services in relation to such
security within the last 12 months.

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