Aberdeen rejigs £112m Thai trust to improve returns

Aberdeen rejigs £112m Thai trust to improve returns

The board of the £112m Aberdeen New Thai Investment Trust has proposed changes improve returns for shareholders.

The adjustments are being put forward after a period of relative underperformance.

These changes include increasing the company's small cap exposure, allowing limited investments in unquoted Thai companies ready for listing and having a greater cost allocation to capital.

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Other changes include the payment of an interim dividend starting in the third quarter of 2018, reducing the management fee to 0.9 per cent from 1 per cent and proactively using the gearing facility. 

Nicholas Smith, chairman of the Aberdeen New Thai investment trust, said the board and the investment manager are optimistic about investing in Thailand, given its proven resilience in the face of political and other uncertainties, the quality of many of its companies and the access to excellent regional growth prospects that it provides.

He said: "I am confident about Thailand's prospects, the companies in the portfolio, and their ability to perform.

"I believe the changes set out today will further enhance the attractions of the company and illustrate the advantages of a closed end structure with an independent board."

The changes have been suggested after consultation with its investment manager.

Despite the company achieving positive absolute returns over the longer term, the board and investment manager felt after five years of underperforming the benchmark of the stock exchange of Thailand index, future results can be improved by amending its investment policy and approach. 

This underperformance partly reflects the investment manager's highly selective style - applying a bottom-up, stock-picking approach, with an emphasis on strong corporate governance - at a time when the Thai market has been buoyed by speculative buying, boosting quality and non-quality stocks alike. 

Under these changes, the investment manager will look to increase its small cap exposure beyond the existing 35 per cent of the overall portfolio.

This is because such companies, are often under-researched, but have the ability to offer good returns.

The company will change its cost charging structure, which will see the company charging 75 per cent of its management fees and interest costs to capital. 

The board will recommend the investment policy change with regards to unquoted investments to shareholders at its annual general meeting on 21 June 2018. 

Adithep Vanabriksha, chief investment officer of Aberdeen Standard Investments, Thailand, said: "Adjusting the investment policy will enable us to invest a greater proportion of the company's portfolio in the small cap sector and unquoted companies.  

"This will allow us to access a wider pool of candidate stocks to research that could further enhance the company's performance over time."