Snapshot: Asia-focused trusts outperform peers

Investment trusts focusing on the Asia Pacific region have been among the best performing for the year to date, significantly outperforming their open-ended counterparts.

But it is not just Asia where a closed-ended structure has produced strong performance; trusts with exposure to Japan and Europe have also delivered higher returns than their IMA peers.

Data from FE Analytics shows for the year to date to November 24, the AIC IT Country Specialists Asia Pacific sector has delivered an average total return of 37.39 per cent, while the AIC IT Asia Pacific excluding Japan Equities segment has returned an average 14.24 per cent.

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This significantly outstrips the average performance of the IMA Asia Pacific excluding Japan sector of 11.09 per cent, and the IMA Asia Pacific including Japan average return of 6.78 per cent in the same period.

Within the AIC Asia Pacific sector, the best-performing trusts so far this year are focused on India, with these vehicles apparently benefiting from the boost to the country following the election of Narendra Modi in May.

Excluding venture capital trusts, the best-performing investment vehicle is India Capital Growth, managed by Ocean Dial Asset Management, which has delivered a 47.5 per cent return, according to the AIC.

Jemma Jackson, AIC PR manager, explains: “The average investment company is up 6 per cent this year to October 31, not quite the spectacular returns of 2013 but is respectable in the context of the low-interest-rate environment.

“Strong performance in the year to date has come from India-focused investment companies in particular, with India Capital Growth up 48 per cent, New India up 47 per cent and JPMorgan Indian up 45 per cent, making them the top-three performing companies.”

Meanwhile, Japanese investment trusts have also outperformed the equivalent IMA sector, something that could be attributed to the closed-ended structure and lack of liquidity issues.

Japan has had an interesting year, including a pause for breath in markets after the consumption tax hike in April and concerns over the future of Abenomics, as well as a rally following unexpected quantitative and qualitative easing in October. These were swiftly followed by concerns as the country entered recession.

The AIC IT Japan Equities sector average of 5.66 per cent for the year to date is more than five times the 0.48 per cent delivered by the IMA Japan sector. The structure of trusts being invested in through the purchase of shares means these vehicles would have suffered less in terms of investment flows during periods of volatility.

With Europe having faced similar geopolitical and economic pressures this year, including the economic slowdown in the eurozone, it is therefore not surprising the AIC IT Europe sector average of 5.02 per cent is again significantly higher than the IMA Europe including UK sector average return of 1.72 per cent.

That said, there are some regions where closed-ended vehicles have lagged their open-ended counterparts, particularly in the North America, UK Equity Income and UK and European Smaller Companies sectors.