The £210m closed-ended vehicle has returned 140.83 per cent in the last five years, compared with 108.45 per cent from the $2.6bn Aberdeen Asian Smaller Companies fund.
The investment trust also has a much better record since 2008 and has lost less during a turbulent 2011.
Performance of fund vs trust over 10-yrs
| Name |
6-month |
1-yr |
3-yrs |
5-yrs |
10-yrs |
| Aberdeen Asian Smaller Companies Investment Trust |
-1.52 |
-1.23 |
174.1 |
140.83 |
780.88 |
| Aberdeen Global Asian Smaller Companies |
-8.96 |
-9.69 |
94.24 |
108.45 |
N/A |
Source: FE Analytics
However, this outperformance has come at a price: the investment trust is substantially more volatile than its counterpart, and also has a higher maximum loss over a five-year period.
There are a few explanations for the discrepancy in performance. The Aberdeen Asian Smaller Companies Investment Trust is significantly cheaper, which has a big impact on performance in the long-term. According to FE Analytics data, the investment trust has a total expense ratio (TER) of 1.7 per cent, compared with 2.06 per cent from its open-ended equivalent.
The trust is also far more concentrated than the fund, meaning it will outperform as long as the manager’s picks perform well. There is a big overlap in the top-10 holdings of the two portfolios, but the investment trust has bigger positions in Gujarat Gas, small cap valve specialist Aeon, and cash and carry Siam Makro.
Moreover, the use of gearing during the market rebound in the aftermath of the Lehman crash benefitted the investment trust significantly. In 2010 alone, Aberdeen Asian Smaller Companies Investment Trust returned 67.12 per cent, outperforming its open-ended equivalent by around 10 per cent.
However, gearing tends to work against a vehicle in down periods. This year the trust has been more than twice as volatile as the Aberdeen Asian Smaller Companies fund. Currently, 2.3 per cent of the portfolio is geared.
Performance of fund vs trust over 5-yrs
Source: FE Analytics
It is not only the Aberdeen trust that has fared better than its fund equivalent. The average investment trust in the IT Asia Pacific excluding Japan Equities sector has returned 37.75 per cent more than the average IMA Asia Pacific excluding Japan fund over five years.
Aberdeen Asian Smaller Companies Investment Trust is the best-performing vehicle in the entire AIC Investment Companies universe over a 10-year period, with returns of 780.88 per cent. Its sector average returned just 194.69 per cent in this time.