Scouller points out that Aberdeen Asian Smaller Companies – the best-performing trust in the IT Asia Pacific ex Japan Equities sector over the past three years – and Schroder Oriental Income – one of the best-performing income trusts in the sector – both look relatively cheap compared with their historical averages.
However, he says that after a sustained stockmarket rally there is little value in the market and on absolute grounds the Aberdeen and First State trusts are still trading close to NAV.
"Following a significant rise in stockmarkets over recent months, there are very few trusts which appear ‘cheap’ on a discount basis in our view," he commented.
"This situation is fairly typical during a stockmarket rally, with discounts pushed narrower by demand for shares at a time of investor optimism."
"Areas which have seen some de-rating include some of the Asian trusts; however, many of these are trading close to NAV, and don’t look fundamentally ‘cheap’."
"Examples include Aberdeen Asian Smaller Companies on a 3 per cent discount, which compares with a six-month range of a 4 per cent discount to a 7 per cent premium, and Schroder Oriental Income trading at NAV, compared with a range of a 6 per cent premium to a 0 per cent discount."
Aberdeen Asian Smaller Companies is the best-performing Asian-focused fund, either open- or closed-ended, over three and five years, more than doubling the returns of the best open-ended fund over the latter period.
Data from FE Analytics shows it has made 97.63 per cent in share price terms over the past three years while its bespoke benchmark – split 50/50 between the MSCI AS Asia Pacific ex Japan and MSCI AC Asia Pacific ex Japan Small Cap indices – has made just 15.43 per cent.
Performance of trust vs benchmark over 3yrs
Source: FE Analytics
In NAV terms the fund has made 86.4 per cent, way ahead of the second-best result in the sector.
However, in recent months the share price has declined more than the index and the trust has slipped onto a slight discount. For investors with a longer term view, this could be a good entry point.
Performance of trust vs benchmark over 3 months
Source: FE Analytics
Schroder Oriental Income is another fund with an outstanding track record.
Matthew Dobbs’ £405m trust has made 55.53 per cent in share price terms over the past three years, and 60.8 per cent in NAV terms. The MSCI AC Asia Pacific ex Japan benchmark has made just 16 per cent.
Performance of trust vs benchmark over 3yrs
Source: FE Analytics
The trust is fourth in the sector over both three and five years. Data from the AIC shows that it is close to its widest discount over the past year of 1.85 per cent.
The discount on the Aberdeen Asian Income fund, which has marginally outperformed the Schroders fund over three years, is also near to its widest over a year, according to AIC figures, at a 0.1 per cent premium compared with a widest discount of -0.68 per cent. The average figure over the year is a 4.1 per cent premium.
Scottish Oriental Smaller Companies Trust, second only to Aberdeen Asian Smaller Companies in the sector over three years, is at -0.46 per cent compared with a -0.72 per cent average. It has been as wide as -10.94 per cent during the past three years.
Scouller says that there are better bargains outside the Asia ex Japan sector, although all the funds he highlights invest in emerging market themes or sectors.
JP Morgan Chinese looks cheap on a 15 per cent discount, Scouller says, with its one-year range of 5 per cent to -16 per cent.
Performance on the trust has been disappointing of late, but this is largely due to its high level of dependence on the MSCI Golden Dragon index.
The fund has made just 3.83 per cent over three years while the index has made 5.11 per cent.
Performance of trust vs benchmark over 3yrs
Source: FE Analytics
However, for investors expecting a rebound in China, this could be a good time to get access to a portfolio on the cheap.
Our data shows the trust has a beta of 0.95 to the index over the past three years, meaning that it can be expected to move up with the index if it grows.
Hansa Trust ‘A’ is another that Scouller highlights as cheap. It has significant investments in companies exposed to emerging markets and is on a 27 per cent discount, at its six-month high. In that period, its lowest was 22 per cent.
Aberdeen New Thai is also out of favour, Scouller points out, on a 16 per cent discount, compared with a range of 19 per cent to a 2 per cent premium.
The trust has made a fortune over the longer term, and has almost exactly doubled over three years, with returns of 100.08 per cent compared with the 84.56 per cent returned by the Thai stock exchange.
However, it suffered sharp losses in the market pull-back this year, and the discount has widened.
Scouller says that Genesis Emerging Market also offers value on a 9 per cent discount, compared with a range of a 1 per cent premium to a 12 per cent discount.
The trust is one of few general emerging markets options in the investment trust universe with a track record of outperforming the MSCI Emerging Markets index in a rally.
For investors looking for cheap access to the long-term emerging markets story, this could be a good place to start.