Best In Class  

Best in Class: Schroder Asian Income

Although in-house analysts are the primary source of stock ideas, Richard also generates stock ideas through his own research and draws on a number of other sources, including sell-side analysts and other investment professionals within Schroders.

Risk

Each stock is then assessed to form an opinion on the value of the business based on fundamental research that looks at sustainability of returns, reinvestment opportunities, management and earnings. Valuation is also important in this part of the process.

Risk is monitored and managed both by the fund manager and by independent sources.

Although it is envisaged that the majority of the fund’s risk will come from stock-specific factors, there is also scope to generate alpha from country allocation.

Many of the stocks will already have attractive yields, but Richard also looks to exploit opportunities in stocks that are set to benefit from improving capital efficiency, rising returns and increasing shareholder distributions.

The portfolio typically consists of 60 to 80 holdings. Cash is not used as a tactical asset and the intention is to remain fully invested, only taking cash positions for liquidity reasons.

Top holdings include Taiwan Semiconductor manufacturing (7.1 per cent), Samsung Electronics (7.0 per cent) and BHP Group (3.2 per cent).

In the past decade the fund has returned 150.95 per cent compared with the IA Asia Pacific ex Japan sector average of 105.6 per cent. It currently has an ongoing charges figure of 0.94 per cent.

With a real focus on identifying companies that are able to grow shareholder value in the long term, the investment process is well thought out and has been implemented with diligence and skill.

We feel this fund offers strong upside potential for investors looking for alternative sources of income over the long-term.

Darius McDermott is managing director of Fund Calibre