Schroder Oriental Income Fund on Friday said sensitive stock selection added value to its portfolio over the financial year, as it outperformed its reference benchmark.

At August 31, the firm’s net asset value per share was 277.24 pence, down 1.3% from 280.94p a year prior. In the twelve months ended August 31, Schroder’s net asset value return was positive 2.5%. This compared favourably to a return of negative 7.7% for the company’s benchmark index, MSCI AC Pacific ex Japan Index.

Schroder’s portfolio includes investments in equities, equity linked securities, government bonds and derivatives.

The firm reported pretax profit of £19.3 million, considerably narrowed from £141.8 million the previous year. However, it recorded income from investments of £40.5 million, up 24% from £32.6 million a year prior.

Chair Paul Meader said the financial year saw two very different environments in the global economy and financial markets. He characterised the period towards the end of 2021 as one of ‘strong economic growth, growing inflationary pressures, bond market stability and equity market euphoria’.

However, 2022 saw a ‘sharp reversal’ of market sentiment, worsened in February by Russia’s invasion of Ukraine.

Meader noted that as global energy prices and inflation rose, bond yields and equities fell sharply. In this context, he described the firm’s positive net asset value return as ‘encouraging’ but ‘modest’.

Looking ahead, Meader said Asia remained an attractive source of equity income, but noted slowing and weak Chinese growth.

Schroder declared a fourth and final interim dividend of 5.60p, up from 4.80p last year, and a total dividend of 11.40p, up from 10.50p.

Schroder Oriental shares were trading 1.0% higher at 246.33p each in London on Friday morning.

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