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Aberdeen Standard Asia trust changes fee structure

Aberdeen Standard Asia trust changes fee structure

The Aberdeen Standard Asia Focus trust is proposing to change its fee structure as part of a sweeping review of the firm’s strategy.

In a statement to the stock exchange this morning (November 30), the board said it will introduce a tiered management fee.

The fee, which is subject to approval by shareholders, will be 0.85 per cent per annum for the first £250m, 0.6 per cent per annum for the next £500m and 0.5 per cent per annum for market caps of £750m and above.

Based on the firm’s last closing share price of 1,456p, this represents a reduction of 23 per cent. 

The fee is currently set at 0.96 per cent of market capitalisation.

The board has also appointed Flavia Cheong, Abrdn’s head of equities for Asia Pacific, to the management team of the firm, as a joint lead manager alongside Hugh Young.

The changes have been proposed by the board in order to ensure it can continue to invest in companies that can deliver the best returns for shareholders, “and not to be inhibited by the enormous difference in the relative size of the Asian market.”

"The board believes that the measures proposed below will assist in the marketability of the company's shares, thus increasing the potential to narrow the discount to net asset value."

The firm is also removing its market capitalisation limit of $1.5bn (£1.12bn), saying the board believes this cap is limiting the portfolio managers from investing in “the high growth companies particularly in larger markets like China and India”.

The board added that even with the cap removed, the firm’s investment policy will be focussed on being a small company portfolio.

Additionally, it will propose to shareholders to amend the investment policy so no new investments will be made in Australasia. However, the firm does not intend to dispose of its three holdings in the region.

The board is also increasing the level of target dividends to 32p per share, doubling the 16p paid for the financial year ending July 31 this year.

Young said he was delighted to welcome Cheong as co-manager. 

“She will assist Gabriel Sacks and the teams in both North and South Asia in taking advantage of the opportunities that continue to present themselves across the Asian markets.”

He added the maturing of the stock markets in China over the last ten years opened up another field for the firm to look for companies capable of delivering exceptional returns.

“I remain as excited by the opportunities in Asia as I did when I first arrived in Singapore 30 years ago. 

“I believe the changes announced today will strengthen both the investment proposition and underpin the future prospects of the company."

sally.hickey@ft.com