The MSCI AC Asia ex Japan Index recorded a positive return amid continued investor optimism for a return to economic normality and an end to the Covid-19 pandemic.
Taiwan, where strong performance from information technology (IT) stocks supported gains, was the best-performing index market.
Conversely, the Philippines finished in negative territory, owing to a sharp rise in coronavirus cases which resulted in tighter restrictions.
The Trust (NAV) posted a gain over the first quarter of +4.3% and outperformed the MSCI AC Asia ex Japan (NDR) index, which gained +1.8%.
At the regional level, country allocation was the key driver of the fund’s relative returns, with the underweighting of China and overweighting of Hong Kong the most notable factors. Stock selection was also positive, especially in Hong Kong and Taiwan, while it was weak in China.
At the sector level, stock selection was notably strong in the communication services and IT sectors. Sector allocation also aided returns
Equity markets in Asia started 2021 very strongly but have recently experienced a reversal of almost all the gains, as a sharp rise in US bond yields and weaker investor sentiment have created greater uncertainty.
Risk appetite also remains heavily influenced by the flow of data surrounding the Covid-19 pandemic and the knock-on implications for economic activity in coming months.
Equity valuations are clearly already pricing in a large part of the recovery in earnings expected in 2021. However, rich valuations are a global phenomenon, rather than anything Asia-specific. The prevailing optimism is not unreasonable, given the scope for a sustained snapback in activity in the next two years.
Meanwhile, the ultra-low levels of interest rates and bond yields around the world are currently offering investors few alternatives to equities.
In this uncertain environment, we will continue to run relatively ‘balanced’ portfolios, without any major style bias. We will maintain exposure to both elements of the ongoing cyclical upswing and longer-term structural growth themes within the region.
|Q1/2016 - Q4/2016||Q1/2017 -Q4/2017||Q1/2018 - Q4/2018||Q1/2019 - Q4/2019||Q1/2020 - Q4/2020|
|Net Asset Value||27.6||38.7||-11.7||15.0||29.8|
|MSCI AC Asia ex Japan (NDR)||16.1||29.4||-9.0||13.6||21.2|
The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Past performance is not a guide to future performance and may not be repeated.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.
Investors in the emerging markets and the Far East should be aware that this involves a high degree of risk and should be seen as long term in nature. Less developed markets are generally less well regulated than the UK, they may be less liquid and may have less reliable arrangements for trading and settlement of the underlying holdings.
The trust holds investments denominated in currencies other than sterling, investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall.
The trust Invests in smaller companies that may be less liquid than in larger companies and price swings may therefore be greater than investment trusts that invest in larger companies.
The trust may borrow money to invest in further investments, this is known as gearing. Gearing will increase returns if the value of the investments purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so.
Investments such as warrants, participation certificates, guaranteed bonds, etc will expose the fund to the risk of the issuer of these instruments defaulting on paying the capital back to the fund.
Gearing will increase returns if the value of the investments purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so. Investments such as warrants, participation certificates, guaranteed bonds, etc will expose the fund to the risk of the issuer of these instruments defaulting on paying the capital back to the fund.