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Schroder Oriental Income Fund Ltd
13 November 2023
Schroder Oriental Income (SOI)
13/11/2023
Results analysis from Kepler Trust Intelligence
Schroder Oriental Income (SOI) has released its financial
results for the year ending 31/08/2023.The trust saw its NAV
decrease by 3.5% on a total return basis, which compares to a
decrease of 8.1% for the trust's formal benchmark, marking another
year of outperformance.
Performance was materially impacted by currency movements. A
number of countries' returns have delivered a positive return in
local currency terms, but when the impact of currency translation
back to sterling was taken into account, these returns were
negative.
SOI has paid four quarterly dividends totalling 11.80p per share
over the course of the year. This marks an increase of c. 3.5% on
the previous year and the 17(th) year of consecutive dividend
growth.
The shares of the trust have remained at a discount throughout
the year, ending the period at a discount of 4.5%.
The trust's chairman, Paul Meader, has taken the opportunity "to
commend our investment manager for achieving such consistent and
considerable outperformance over recent years" and has said of the
future, "I look forward with modest optimism... the fundamentals of
the region, its companies and their strong dividend growth will
once again attract international capital. The company is well
placed to benefit from that trend when it arrives."
Kepler View
In our opinion, managers Richard Sennitt and Abbas Barkhordar
have navigated Schroder Oriental Income (SOI) admirably through the
challenging 12-month period to August 2023. The region has been
affected by changes in sentiment due to a series of troubling
factors, ranging from sky-high inflation and poor US-China
relations to sharply rising interest rates.
These factors have led to fluctuating returns across the region
best demonstrated by the volatile performance of Hong Kong and
China. They declined as zero-covid policies hampered the economy,
and then recovered as these policies were lifted, before waning
again as the recovery failed to materialise as expected. The
managers have been underweight China which has helped and been
supported by good company selection. We believe this is testimony
to the stock selection capabilities which has repeatably driven
outperformance. Furthermore, positions in Korea and Taiwan,
particularly in tech have been strong performers over the course of
the year. We believe this is another example of the managers'
quality approach benefitting the trust.
Absolute performance has been affected by a strengthening of
sterling which led to every country delivering negative returns
when translated back. However, the relative performance versus the
index is impressive in our opinion. Richard and Abbas have
outperformed by 4.6% largely as a result of stock selection. The
trust delivered a 17(th) consecutive year of dividend growth. This,
in our opinion, shows the strength of identifying firms with
sustainable dividends and supports our view of the trust being a
very good way of accessing the growing dividend culture in
Asia.
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(END) Dow Jones Newswires
November 13, 2023 09:35 ET (14:35 GMT)
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