Fund of the week: Play the rise of Asia's consumer
Asian markets have had a very good year. Our fund of the week is taking advantage of that by investing in the rise of the Asian consumer.
It's been a rollicking good year for Asian markets. "But the rally is too much," says Susie Rippingall, manager of the Scottish Oriental Smaller Companies Investment Trust.
"It's happened very quickly, and my concern is that analysts have got ahead of themselves in upgrading economic forecasts and corporate earnings. I specialise in smaller companies, so I see more of basic manufacturing. And they have very little visibility in orders, as they're geared towards the West. So unless you think European and US consumers are going to go back to their old habits, there is a risk of disappointment."
With this defensive point of view in mind, 6% of the trust's holdings (it trades on a 6.3% discount to net asset value) is now sitting in cash. There is no external debt ('gearing'). Rippingall has started positioning much of the fund towards the rise of the Asian consumer. About half of the trust's financial stocks, for example, are plays on key themes such as hire purchase.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The biggest holding is Home Product Center, "the B&Q of Thailand with about 40 stores". It specialises in modern retail, and sells everything from paint to garden furniture. It trades on a forward p/e of 15.
She also holds Raffles Medical, the hospital and medical centres group, "which is very reasonable value and growing at 10-15% a year". A bottom-up stock picker, Rippingall looks for value when picking stocks, so it's no surprise to see the portfolio now running on a modest median p/e of 12 times.
Over five years, the trust, which has a relatively reasonable expense ratio of 1.6%, has returned 154% against a 130% rise in the MSCI Asia Ex Japan Index.
Tel: 0131-226 3271.
table.ben-table table { border: 3px solid #2b1083;font: 0.928em/1.23em verdana, arial, sans-serif;}
th { background: #2b1083; padding: 10px 5px;color: white;font-weight: bold;text-align: center;border-left: 1px solid #a6a6c9;}th.first { border-left: 0; padding: 5px 2px;text-align: left;}
tr {background: #fff;}
tr.alt {background: #f6f5f9; }
td { padding: 5px 2px;text-align: center;border-left: 1px solid #a6a6c9;color: #000;vertical-align: center;}td.alt { background-color: #f6f5f9; }td.bold { font-weight: bold; }td.first { border-left: 0; text-align: left;}
Scottish Oriental Smaller Companies top ten holdings
Home Product Center | 2.7 |
MobileOne | 2.3 |
Yuhan Corp | 2.3 |
JVM Co | 2.1 |
Raffles Medical | 1.8 |
Tisco Bank | 1.8 |
Aboitiz Power | 1.7 |
Daegu Bank | 1.7 |
Commercial Bank of Ceylon | 1.6 |
Security Bank | 1.6 |
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
US election: Trump is back - what does it mean for your money?
Trump is back, but what does his election victory mean for your money and which stocks are tipped to do well?
By Kalpana Fitzpatrick Published
-
M&S smashes profit expectations on the back of strong food sales
Marks & Spencer’s half-year profits rose 17.2% to £407.8 million, well ahead of the £359 million analysts were forecasting
By Chris Newlands Published