The current premium is one of the highest among UK investment trusts, reflecting the consistent outperformance of the portfolio, and decent level of income that goes with it. However, this C-share issue will give retail investors the opportunity to get exposure to the portfolio for a fraction of the cost. The offer period closes on 9 November 2012.
The trust is a top quartile performer in the IT Asia Pacific exc. Japan Equities sector over one, three and five year periods, and has returned 164.93 per cent to investors since launch in December 2005; it currently yields 3.29 per cent.
Performance of trust versus benchmark since launch
Source: FE Analytics
Charles Cade, investment trust analyst at Numis Securities, says this is a good opportunity to get into a fund with a strong track record.
“The only issue with C Share issues is that with a fund, when you buy it you know what your exposure is, but with a C Share issue you won’t know definitively until your money has been invested,” he said.
Aberdeen says the money will be invested by 28 June 2013 at the latest, although Cade says he expects this to happen well before then.
FE Alpha Manager Hugh Young (pictured), head of the Asian Equities team that runs the portfolio, says that the potential for income investing in Asia is getting stronger.
"Longer term the Asia Pacific region will continue to offer investors with the opportunity to diversify their sources of income from the traditional UK equity, fixed income and property sectors. At the same time, investors will gain exposure to the superb growth potential of Asian companies," he said. Young explains that over half of all listed companies in the region have increased their dividends by 10 per cent or more in any given year between 200-2011, and expects the shareholder culture to continue to grow.
“Of course macro headwinds from the indebted West may mean muted corporate earnings growth in the near term,” he explained.
“However, for those investors willing to do the work there are well managed companies within the region with strong balance sheets and sustainable business models that are likely to be able to maintain dividend pay-outs this year.”
The benefit of issuing C Shares is that existing shareholders will suffer no dilution in the value of their holdings, and they will convert to ordinary shares on an NAV for NAV basis.
By expanding the number of shares in issue the liquidity for existing shareholders will also be improved, the company claims.
The high dependence of the portfolio on Australian stocks for income was explained by Flavia Cheong, analyst on the management team, in an FE research article earlier this month.