Aberdeen trust publishes history of 20 years of Asian investment

Launched on 8 October 1995, the investment trust has witnessed three great economic upheavals, the Asian crisis of 1998, the dot-com boom and bust of 2000 and the global financial crisis in 2008. 2015 has also been a year of turbulence.

Chairman Nigel Cayzer explains in his preface to the history that much has changed since the launch of the trust. “The Asian economies have been the powerhouses of the world with rapid growth, the emergence of an aspirant middle class, and with it, aspiring local economies”, he said.

The review comes as the world braces for the so-called “normalisation” of US central bank policy, which the trust believes “may be a good thing”, pointing, as it does, to economic strength in the US and paving the way for weaning markets off of speculative capital. But, the trust warns, “the prospect of a rate hike could accelerate fund outflows from Asia in the short term”.

As the trust prepares to distribute the historical account to shareholders and enquirers later this month, it explained: “As economies develop and flourish, smaller companies are often the key beneficiaries of that domestic growth, occupying strong market positions and niche areas. Smaller companies are significantly geared into the megatrend of the Asian consumer.

“In Aberdeen’s view, investors would do well to go back to basics; embrace businesses that are easy to understand; look for companies with broad regional exposure, established franchises and solid finances; seek out firms that respect minority shareholders.

Hugh Young, manager of the trust and MD of Aberdeen Asset Management Asia, said: “Smaller companies tend to be under-researched, and because of their size, have more potential for growth than larger companies. In Asia these differences are magnified: research coverage is often thin – benefiting active managers like us who do our own due diligence – while headline growth rates are that much stronger. We would therefore expect smaller companies to outperform their large cap counterparts over the longer term, although periods of mispricing and illiquidity mean investors must be patient.”