IT Asia Pacific Excluding Japan has proved to be the best investment trust sector for delivering double-digit annualised returns over rolling 10-year periods, according to research by FE Trustnet.
The sector achieved this feat in eight of the decade-long periods finishing at the end of each of the past 10 calendar years.
IT Country Specialists: Asia Pacific, which contains trusts that focus on individual countries, finished second in the study, delivering double-digit annualised returns in six of the past 10 rolling decade-long periods, while IT UK Smaller Companies managed it in five.
Sectors that delivered highest number no. of 10%+ annualised returns over 10yr periods
| Name | Annualised performance (%) 31/12/1998 to 31/12/2008 | Annualised performance (%) 31/12/1999 to 31/12/2009 | Annualised performance (%) 31/12/2000 to 31/12/2010 | Annualised performance (%) 31/12/2001 to 31/12/2011 | Annualised performance (%) 31/12/2002 to 31/12/2012 | Annualised performance (%) 31/12/2003 to 31/12/2013 | Annualised performance (%) 31/12/2004 to 31/12/2014 | Annualised performance (%) 31/12/2005 to 31/12/2015 | Annualised performance (%) 31/12/2006 to 31/12/2016 | Annualised performance (%) 31/12/2007 to 31/12/2017 | Average annualised returns (%) | Periods of 10% + annualised returns |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IT Asia Pacific Excluding Japan | 10.33 | 9.79 | 12.62 | 11.53 | 12.43 | 10.35 | 12.04 | 10.8 | 11.08 | 9.57 | 11.054 | 8 |
| IT Country Specialists: Asia Pacific | 12.47 | 12.25 | 17.87 | 13.29 | 15.73 | 9 | 11.63 | 7.86 | 8.53 | 8.76 | 11.739 | 6 |
| IT UK Smaller Companies | 6.82 | 5.16 | 5.67 | 6.95 | 13.7 | 14.31 | 11.14 | 11.29 | 9 | 12.17 | 9.621 | 5 |
Source: FE Analytics
This study excluded those sectors in which fewer than five trusts had a sufficient track record to be included.
The only two 10-year periods in which IT Asia Pacific Excluding Japan failed to deliver double-digit annualised returns were those that finished at the end of 2009 and 2017, where the figures stood at 9.79 per cent and 9.57 per cent respectively.
The sector’s average annualised growth rate over the period in question is 11.05 per cent.
Of its 13 trusts with a track record long enough to be included in the study, 10, or 77 per cent, made double-digit annualised returns in at least five of the 10 rolling decade-long periods.
Annualised returns of trusts over 10yr periods
| Name | Annualised performance (%) 31/12/1998 to 31/12/2008 | Annualised performance (%) 31/12/1999 to 31/12/2009 | Annualised performance (%) 31/12/2000 to 31/12/2010 | Annualised performance (%) 31/12/2001 to 31/12/2011 | Annualised performance (%) 31/12/2002 to 31/12/2012 | Annualised performance (%) 31/12/2003 to 31/12/2013 | Annualised performance (%) 31/12/2004 to 31/12/2014 | Annualised performance (%) 31/12/2005 to 31/12/2015 | Annualised performance (%) 31/12/2006 to 31/12/2016 | Annualised performance (%) 31/12/2007 to 31/12/2017 | Average annualised returns (%) | Periods of 10% + annualised returns |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Aberdeen Asian Smaller Companies Investment Trust | 19.67 | 16.89 | 23.83 | 23.01 | 26.47 | 19.38 | 18.82 | 11.83 | 13.11 | 14.61 | 18.762 | 10 |
| Scottish Oriental Smaller Companies | 18.19 | 19.18 | 25.34 | 20.13 | 23.24 | 18.44 | 19 | 14.35 | 14.98 | 15.54 | 18.839 | 10 |
| Schroder Asia Pacific | 10.36 | 7.06 | 13.46 | 14.73 | 17.7 | 12.84 | 13.19 | 10.13 | 10.9 | 11.43 | 12.18 | 9 |
| Invesco Asia Trust | 9 | 6.14 | 14.35 | 12.34 | 15.57 | 14.14 | 14.06 | 10.36 | 11.46 | 11.42 | 11.884 | 8 |
| Aberdeen New Dawn Investment Trust | 15.77 | 14.34 | 19.99 | 17.16 | 19.7 | 12.63 | 12.95 | 6.38 | 8.07 | 9.7 | 13.669 | 7 |
| Baillie Gifford Pacific Horizon IT | 14.96 | 13.27 | 17.26 | 15.4 | 15.57 | 11.34 | 11.61 | 8.19 | 6 | 6.64 | 12.024 | 7 |
| Pacific Assets Trust | 6.55 | 2.97 | 10.14 | 10.22 | 14.78 | 11.43 | 13.46 | 10.64 | 11.46 | 8.17 | 9.982 | 7 |
| Fidelity Asian Values PLC TR in GB | 5.92 | 4.9 | 12.85 | 12.55 | 15.47 | 13.54 | 14.01 | 9.79 | 12.89 | 10.32 | 11.224 | 7 |
| Edinburgh Dragon Trust | 11.33 | 8.66 | 14.13 | 15 | 18.88 | 12.96 | 14.01 | 8.06 | 9.68 | 9.8 | 12.251 | 6 |
| JP Morgan Asian IT | 12.53 | 6.13 | 11.23 | 10.38 | 12.01 | 9.33 | 10.55 | 6.53 | 7.15 | 6.94 | 9.278 | 5 |
| Martin Currie Asia Unconstrained Trust | 10.18 | 3.68 | 9.27 | 10.5 | 13.18 | 8.85 | 8.49 | 3.02 | 5.21 | 5.54 | 7.792 | 3 |
| Henderson Far East Income | 8.68 | 10.01 | 14.47 | 9.82 | 12.26 | 8.81 | 9.21 | 7.26 | 9.62 | 9 | 9.914 | 3 |
| Schroder Asian Total Return Investment Company | 7.01 | 3.53 | 10.12 | 9.3 | 12.46 | 8.2 | 10.58 | 7.69 | 8.89 | 9.82 | 8.76 | 3 |
Source: FE Analytics
Two trusts in the sector – Aberdeen Asian Smaller Companies and Scottish Oriental Smaller Companies – made double-digit annualised returns in every one of the 10-year periods.
Schroder Asia Pacific managed the feat in nine of the 10-year periods, the Invesco Asia Trust managed it in eight and four trusts managed it in seven.
Aberdeen Asian Smaller Companies and Scottish Oriental Smaller Companies both delivered average annualised returns of 18.8 per cent over the periods in question.
However, despite the spectacular returns these trusts have delivered over the best part of the past 20 years, absolute performance has been lacklustre over the medium term. Scottish Oriental Smaller Companies has made 19.37 per cent over the past five years, while Aberdeen Asian Smaller Companies has made just 1.27 per cent. The latter in particular has suffered over this time as a result of moving from a premium to a discount, which currently stands at 15 per cent to net asset value.
Four of the 10 rolling decade-long periods in which the IT Country Specialists: Asia Pacific sector failed to make double-digit annualised returns came in the past five years. The sector’s average annualised growth rate over the period in question is 11.74 per cent, higher than that of IT Asia Pacific Excluding Japan.
Three of the five trusts in the sector, or 60 per cent, beat this benchmark in at least five of the 10 decade-long periods.
Aberdeen New Thai, which invests in companies based in Thailand, is the only trust in the sector that made double-digit annualised returns in each of the periods, with an average figure of 17.2 per cent. Aberdeen New India Investment Trust made double-digit annualised returns in eight of the decade-long periods and JP Morgan Indian managed it in seven.
The IT UK Smaller Companies sector struggled in the first half of the 10 periods in question, but has excelled as the bull run has taken hold, with the five periods in which it has delivered double-digit annualised returns ending in the past six calendar years.
Of the 11 trusts in the sector with a long enough track record, eight delivered double-digit annualised returns in five or more of the past 10 decade-long periods, or 73 per cent. The average annualised returns figure for the sector over this time stands at 10.17 per cent.
BlackRock Smaller Companies IT achieved this feat in seven of the past 10 decade-long periods, with an average annualised return of 13.02 per cent. Four funds managed it in six and another three manged it in five.
Looking at the past decade, while there are 12 investment trust sectors that have made double-digit annualised returns over the 10 years to today’s date, just two of these contain five or more trusts with a track record of this length: IT UK Smaller Companies with annualised returns of 12.68 per cent and IT Asia Pacific Excluding Japan, with annualised returns of 11.44 per cent.
Of the 15 IT UK Smaller Companies trusts that qualify, 12, or 80 per cent, have made double-digit annualised returns over the past decade. Again, BlackRock Smaller Companies IT sits top of the pile with annualised returns of 17.12 per cent.
Of the IT Asia Pacific Excluding Japan trusts that are more than 10 years old, nine of the 15 trusts with a track record of this length, or 60 per cent, have delivered double-digit annualised returns over this time.
Aberdeen Asian Smaller Companies and Scottish Oriental Smaller Companies again sit in first and second place in the sector, with annualised returns of 15.19 and 14.36 per cent, respectively.