Pacific Horizon trust feels impact of Chinese volatility

The Pacific Horizon Investment Trust saw its net asset value (NAV) per share fall 1.6 per cent in the 12 months to July 31 as volatility in Chinese markets weighed on performance.

In the trust’s preliminary results Jean Matterson, chairman of the board, stated: “For much of the financial year the company was in a position to report positive absolute returns.

“It is, however, frustrating to note that weak performance at the end of July, which is the last month of the financial year, resulted in an overall annual loss for the portfolio. The company’s NAV performance was hit particularly hard by falls in the Chinese market in the last 10 days of the month.”

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However, the results also showed the vehicle, managed by Baillie Gifford’s Ewan Markson-Brown with Roderick Snell as deputy, increased its share price by 2.2 per cent while the discount narrowed from 11.5 per cent to 8.2 per cent and net assets were recorded as £125m.

The manager’s review of the year noted the portfolio had increased its exposure to three key themes driving Asian equity returns; innovation and technological improvement that drives economic growth, structural reforms and the growth of middle income consumers.

As a result the managers noted the portfolio contains more growth companies that are dependent on innovation for their success, while exposure to small and medium sized stocks has increased to 65 per cent of the portfolio, from 53 per cent a year earlier.

The managers added: “Our focus remains on investment in individual stocks which will benefit from the economic, social and technological changes which are in evidence across the region. The Company has taken on 10 per cent gross gearing, at the time of draw down, and we see current volatility in the asset class as an ideal opportunity to add to positions in fast growing companies.”