Fund Rationale: Schroder Asian Growth Fund

Schroder Asian Growth Fund
SGD Retail Class A Distribution Shares (ISIN: SG9999000327)
Fund Manager Page

Introductory information
The Schroder Asian Growth Fund (the "Fund”) aims to achieve long term capital growth primarily through investing in securities of companies quoted on some or all of the stock markets in countries in Asia, including Australia and New Zealand but excluding Japan. The Fund is benchmarked against the MSCI AC Asia Ex Japan NR Index, and is suitable for investors who seek long-term capital growth, and understand the risks associated with investing in Asian equities.

The SGD Class A Distribution Shares are the oldest share class of the Fund, which was incepted on 8 May 1991.  As of July 2020, the Fund managed a total asset of SGD 1.6bn.

 

Characteristics
The Fund aims to achieve long term capital growth primarily (i.e. approximately two-third of its assets) through investing in securities of companies quoted on some or all of the stock markets in countries in Asia (including Australia and New Zealand but excluding Japan). The portfolio of the Trust will be broadly diversified with no specific industry or sectoral emphasis.

The investment philosophy of the Managers is founded on the belief that returns over the long term are determined by economic and corporate fundamentals and that the analysis of those factors should be the foundation of the Managers’ investment strategy. Given that equity markets are not efficient in Asia and that many of the best investment ideas are not well researched, the Managers believe their style of active management with emphasis on bottom-up stock analysis will add value.

As of July 2020, the Fund holds 44.5% in equities from China, 15.4% from Hong Kong, and others including Taiwan, South Korea, India, the Philippines, and Singapore. Its top 5 sector exposure includes consumer discretionary, IT, financials, communication services, and industrials, each ranging from an allocation of 6.0% to 25.3%. The Fund is on the CPF Investment Scheme - List A Fund, and is included under the CPF Investment Scheme for Ordinary Account. It has been classified by the CPF Board under the risk classification of “Higher Risk – Narrowly Focused (Regional, Asia).”

 

Background information and cost
The Fund has an underlying fund management fee of 113bps per annum (1.13% p.a.) and total expense ratio (“TER”) of 133bps per annum (1.33% p.a.). Endowus have arranged for the Fund Management Company to rebate the trailer fees which Endowus will refund 100% back to the client to achieve a lower net management fee of 56.3bps (0.563% p.a) and a net TER of 76.8bps (0.768% p.a.). Endowus do not charge a preliminary sales charge or any other fees, other than the all-in advice fee.

 

Selection criteria for Endowus
Endowus have selected the Schroder Asian Growth Fund as it offers one of the best Asian equity propositions for a Singaporean investor, executing a strategy of higher-than-average exposure to small- and mid-cap stocks, consistent with academic and industry research wherein, over the long term, tilts in equities towards size are pervasive factors that add statistically significant positive returns above the market. Often known as smart beta, exposure to small cap equity generates additional returns in excess to total market returns, and Fund Manager Toby Hudson, leading the strategy since 2007, has consistently delivered superior returns that ranks the Fund in the first percentile among its peers. As of July 2020, the Fund has outperformed the Index ever since inception, in the last 1 month, 3 months, 6 months, 1 year, 3 years, 5 years, and 10 years, with the YTD annualised NAV returns standing at 5.7% vs 5.4%.

Updated by Endowus: 25 Sept 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.