Gabriel Sacks, lead manager of Aberdeen Asia Focus, discusses seeking out Asia’s next generation of market leaders, the trust’s best performer of 2025 and why managers need to be comfortable with the fact that the next low might be just around the corner.
The Monday Manager series covers fund managers that have worked on their fund for over three years, and where fund assets are over £100m.
When did you begin working on the Aberdeen Asia Focus investment trust? How do you divide responsibilities among the team?
I’ve been working in Aberdeen’s Emerging Markets & Asian equities team for 17 years, but took on portfolio management responsibilities for the trust in 2018. I became a lead manager at the end of 2023.
We have always had a highly collaborative culture and rely heavily on the broader team of 35+ people for research support and idea generation.
Our analysts are sector specialists and are incentivised to come up with their best ideas across the region, with a particular focus on quality businesses that have a clear competitive moat but are mispriced. In 2025 alone, the team engaged in around 1,700 meetings with Asian corporates, which translates to about seven meetings per day. Over time we believe the insights from these face-to-face meetings, with further support from a range of quantitative tools, should help us deliver alpha for our clients.
My primary job, with support from Xin-Yao Ng, is to take these ideas and build a high-conviction portfolio that remains reasonably diversified with exposure to a range of structural growth themes in Asia.
What sets this trust apart from other trusts investing in Asia equities?
The trust’s key differential is we are looking to invest in Asia’s next generation of market leaders. So while most Asian equity trusts will own mega caps such as TSMC, Tencent and Samsung at sizeable weights (which are also owned in many global equity trusts) we are looking at the smaller end of the investible universe.
See also: Havelock’s Beddall: ‘Thinking has become a rarefied skill in financial markets’
This gives shareholders in the trust deeper and broader access to the Asia growth story. We believe it also has the ability of enhancing returns and often reducing overall portfolio risk, by increasing diversification and uncovering opportunities where others aren’t looking and/or research coverage is poor.
I would challenge people to recognise more than one or two companies in our top 10 holdings list, which I think is a good thing. Worth noting though that these are not speculative small caps, but rather local or global leaders at what they do, often with balance sheets that are compelling even against global comparators.
What are some themes running through the portfolio? Or areas you are favouring as a result of stock selection?
Our stock picks and their individual growth prospects are really what drive portfolio performance and we assess that on a case-by-case basis through a forward-looking assessment of corporate fundamentals.
But we do offer exposure to a range of structural growth themes in Asia that include: domestic consumption growth in markets such as India and Vietnam; advanced manufacturing and industrial technology development in China and Korea; AI enablement via the IT hardware supply-chain in Taiwan. We could provide more granularity to these themes or indeed add a few more to the list, but the key message here is that we are not short of growth opportunities to pick from.
What was the best performer of 2025 and why? Do you still own this stock?
The biggest contributor to performance was a company called Precision Tsugami which we held at an average weight of 3% during the year and rose 167% in GBP terms.
The company is quite unique in that it operates in China but leverages high-precision technology from its Japanese parent, Tsugami Corporation. It specialises in the customised development, production and sale of high-end computer numerical control (CNC) machine tools which are used across a range of industries, including high-growth areas such as: liquid-cooling connectors required for AI server cooling systems; robotics components; and specialised tools for braking and power systems within the electric vehicle industry. Across its core product of precision lathes, the company holds a leading domestic market share estimated at more than 50%.
We still own the stock in the trust but have taken significant profits. The company has seen a material re-rating from when we first purchased shares and it was trading on a mid, single-digit P/E multiple and offered a dividend yield of circa 9%.
However, it is still reasonably cheap for the growth on offer, trading on circa 13x forward earnings. In 2025 the company announced exceptional results with 37% year-on-year revenue growth and 63% net profit growth, and they have carried this momentum forward into H1 2026, delivering net profit growth of circa 50% year-on-year. We think the company will continue to benefit from the upgrade and automation trend across China’s vast industrial complex.
What’s your stance on AI and tech in Asia?
We have been positive on the tech hardware supply chain in Asia for several years, given the structural growth we see in the demand for advanced chips. This has benefitted the whole semiconductor ecosystem based primarily out of Taiwan. The acceleration in AI capex led by the US technology giants in 2025 and into this year, has led to a surge in the share price of many of these stocks which has greatly benefitted some of our key holdings such as Chroma Ate, Taiwan Union Corporation and Asia Vital, to name a few. Importantly, this has come alongside significant earnings growth which has surpassed consensus expectations.
See also: Aberdeen: Sentiment slips towards private assets despite strong long-term returns
Ultimately, these Taiwanese businesses provide the necessary infrastructure required in servers and data centres that enable AI and therefore are less prone to technology disruption. On the flipside, they are sensitive to a correction in AI capex and have seen a material re-rating in valuations so we have been taking profits (admittedly a bit early) to manage our exposure.
At the moment, we are running an underweight position to the IT sector relative to our benchmark which has been driven by profit-taking in the hardware space as well as a reduction in our exposure to IT software and services which are parts of the industry which we think are more at risk from the emergence of agentic AI.
Have you made any changes to the portfolio so far this year, in what has been a volatile geopolitical situation?
The main thing we have done is to continue to take profits from our winners in AI although we have rotated part of the proceeds into new ideas within the tech hardware sector, such as Grand Process Technology in Taiwan and ASMPT listed in Hong Kong, which have subsequently done well. We think these represented under-appreciated stocks within the IT sector which still offered material upside. In addition, we reduced our exposure to software and services companies where conviction had been waning and where we think business models may be more at risk from the emergence of AI agents.
We also initiated a couple of new names that are more defensive in nature, such as a high-yielding Korean insurer that is likely to see further increases in their payout ratio on the back of the corporate value-up scheme that the government is helping to promote, as well as a Chinese business offering testing, inspection and certification services.
In our view, the latter is a company that should be more of a steady compounder that should nevertheless deliver a healthy rate of growth in earnings of circa 10-15% pa over the medium-term.
At times like these (of heightened geopolitical tension), there is always a temptation to make more material changes to the portfolio to better reflect the relative winners and losers from a crisis. But we try as best we can to maintain a level-head and assess whether there are indeed meaningful or structural changes to corporate fundamentals, which for the most part we don’t think is the case.
As of late March 2026, the Aberdeen Asia Focus trust is trading at a significant discount, with recent data showing it ranging between roughly -8.7% and -11.2% below its Net Asset Value (NAV). How is this discount being managed?
This has been an area of focus for the board, who have put in place a number of measures to help manage the discount since late 2021, including:
- A five-year conditional tender offer to end-August 2026
- A step-up in the absolute level of dividends and a commitment to make this a progressive dividend, paid quarterly to shareholders
- A reduction in the management fee, tied to market cap rather than NAV
- Increased marketing activity
- Share buybacks
Although the discount to NAV remains wider than intended, we have seen a material reduction from more extreme levels over the past 12-18 months. This has been driven by increased share buyback activity but also continued outperformance relative to the benchmark and peers, and improved sentiment towards Asian equities.
We believe consistent performance and increased marketing activity should help build on this momentum as we remind investors of the merits of the asset class and our investment approach.
What has been a career high and low for you?
I am very grateful to have had the opportunity to live and work in Singapore for five years, which helped shape me as an investor and gave me even greater appreciation for how the world’s centre of gravity is moving East.
In terms of a low, it’s never easy going through periods of underperformance, but it is also rather inevitable as a fund manager. So in this job one needs to be comfortable the next low might be just around the corner.
What advice would you give to a young fund manager that is beginning to invest in Asia today?
Be curious and meet as many companies as you can. We are extremely privileged in this job of being able to interview management of some exceptional companies in some of the world’s fastest-growing markets – so make the most of that. You will learn a ton in the process.
Aside from that, don’t forget to temper your enthusiasm by carefully considering what is priced into stock valuations and maintaining sensible diversification as markets can always surprise you!
