London, UK, 3 June 2021
Edison issues review on Invesco Asia Trust (IAT)
Invesco Asia Trust (IAT) continues to generate double-digit annualised NAV total return (11.8% over the past 10 years), supported by consistent income. In August 2020, the board introduced a new dividend policy to pay a regular six-monthly dividend equivalent to 2% of NAV (4% pa), a sizeable dividend enhancement from the FY20 annual dividend of 7p per share, at c 2.5% of NAV. The fund manager, Ian Hargreaves, runs the portfolio, blending growth and value styles. He targets double-digit annualised returns from each portfolio holding for over three years.
The portfolio performance (54 holdings at 31 March 2021) benefited considerably from repositioning in FY20 towards the pandemic 'beneficiaries' and away from banks and other financials. Technology hardware, semiconductors, e-commerce and healthcare stocks have driven the outperformance as the manager took profits from these stocks. The portfolio is now more balanced across sectors. Following the recovery in Asia, led by China, the manager tilted the portfolio towards a more defensive stance, adding a few producers of everyday staples. On the riskier side, he bought into the property sector, which is out of favour with the market, seeing uncertainty created by the pandemic as an opportunity.
We believe the dividend enhancement brings additional stability to the fund's total return. A performance-related conditional tender offer, announced in August 2020 and approved by the shareholders in September 2020, also emphasises the board's focus on total return.
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