Invesco Asia Trust looking for companies across Asia with growth potential that others overlook or underestimate. He seeks to buy them at a good price and then hold them until the market realizes their true value.
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It looks like the strategy is working. A £1,000 investment in a trust three years ago would be worth £1,342 today, well above the average for similar trusts.
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The secret of his success? According to investment manager Ian Hargreaves, who leads a team of seven at Invesco’s Henley, Oxfordshire office while co-manager Fiona Young is based in Singapore, said investment manager Ian Hargreaves.
A nine-person team holds between 600 and 700 meetings with companies annually. “I have about 20 appointments this week alone,” Yang says.
“Most of the time we don’t invest in the companies we meet because at any given time we only have 50 to 60 in our portfolio. But sometimes we find someone who shows great promise.”
Ian and Hargreaves believe that Asia has an interesting proposition for British investors at the moment. While the UK, Europe and the US are struggling with runaway inflation, countries such as China, India, Indonesia and South Korea have not been hit as hard.
Hargreaves says: “The lower inflation reflects the fact that we haven’t seen the same level of stimulus in Asia as we’ve seen in other parts of the world. This means there is no longer the same need for monetary policy to rein it in.”
Of course, the region has its own challenges, such as China’s recovery from strict COVID-19 lockdowns and India’s dependence on high oil prices as a major importer. However, the fortunes of companies in Asia tend not to keep pace with the fortunes of companies in the UK, Europe or the US, so they can offer some balance in a well-diversified portfolio.
The Trust can invest in companies of all sizes and sectors throughout the region except Japan. This means Ian, Hargreaves and the team are free to look for companies with the most potential. “What we’re focusing on is finding value,” says Hargreaves. “We want to find companies of good quality, but at the right price.”
One such find was the Indian car manufacturer Mahindra & Mahindra. “The company is a great manufacturer of tractors and cars,” says Yang.
“But when we bought in 2019, the share price was reduced due to the direction the company is heading.
But we thought that everything that could go wrong had gone wrong and that the company was ready for change. We talked to the new management team, we liked their new strategy and we agreed.”
Since then, the share price has more than doubled. Yang believes that the company has the potential for further development as it works to produce an electric vehicle.
Hargreaves has been with the trust since 2006 and has chaired the trust since 2012.
He believes that the long term is beneficial. For example, when Taiwanese semiconductor company MediaTek delayed launching its 4G-enabled chips in 2017, many investors lost confidence and its share price plunged, Hargreaves said.
“However, because we have known the company for a long time, we have known its capabilities. We have been rewarded for the investment as the company bounced back and entered the market very early with its 5G technology.”
The share price more than tripled.
The trust pays a dividend of around 4%. Its stock market identification code is 0453530 and its ticker is IAT. The annual fees are one percent. The stock is currently trading at a 14% discount.