London, UK, 15 December 2023

Edison issues update on Invesco Asia Trust (IAT): Ready to exploit valuation dislocations in Asia

Invesco Asia Trust’s (IAT’s) one-year NAV total return (TR) of negative 3.7% (vs negative 3.5% for the benchmark) was limited by the measured Chinese re-opening rebound, as the trust moved to an overweight position in China and Hong Kong earlier this year (now at c 43% of portfolio, c 3–4pp above benchmark weight). That said, the managers uphold their conviction in IAT’s Chinese stock picks, and the trust maintained its long-term outperformance of the benchmark and its AIC Asia Pacific Equity Income peer group. IAT still has a cyclical bias, favouring themes such as technology (including semiconductors), consumer and internet, the automotive sector (including growing EV penetration), as well as sustained credit growth and demand for insurance products in Asia.

IAT’s unconstrained, bottom-up strategy of looking for mispriced, quality businesses with strong balance sheets, which should outperform over the next three to five years, looks well-suited for the current environment. Its approach is validated by IAT’s strong long-term track record in terms of risk-adjusted returns and the extensive experience of IAT’s investment manager (including IAT’s lead manager, Ian Hargreaves). Moreover, its balanced approach to growth and income means that IAT is not restricted to stocks that are pure dividend plays. Investors may also appreciate IAT’s active approach to ESG integration, as it not only looks for top ESG performers but also companies that are well-placed to improve their ESG credentials. IAT’s shares trade at a c 13% discount to its NAV including income, which is slightly wider than the five and 10-year average of c 11%.

 
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