The allocation to Aberdeen has been slashed from 4% to 1% after Seneca had the opportunity to invest an amount worth 3% of the Seneca Global Income & Growth trust’s assets into the Luxembourg-domiciled Samarang trust.
Tom Delic, co-manager of the £80m Seneca trust, said the Samarang trust appealed because its manager Greg Fisher restricts the fund size to keep the opportunity set as large as possible.
This, he added, means the trust, managed by Andbank Asset Management, focuses on delivering good performance rather than on increasing its asset base, which many funds in the Asian region tend to do.
“We seek asset managers rather than asset gatherers,” said Delic.
Another attraction is that Samarang’s portfolio trades at about a 50% discount to that of Aberdeen’s, on simple valuation metrics, Delic said.
The Samarang trust focuses on small cap companies across Asia with a median market cap of £100m, versus a median of £6.2bn in the Aberdeen portfolio.
Delic said: “For example, in Vietnam, where Samarang has a large allocation, the fund focuses on the smaller cap end of the market. Here, the manager can find high return on equity operations trading at significant discounts to conservative estimates of the net asset valuation of the business.
“Around 15% of the fund invests in utility businesses in Vietnam such as hydropower and gas distribution. Companies in the sector are trading at high single-digit dividend yields with good growth prospects based on the country’s increasing industrial demands.”
According to FE data, the Samarang Asian Prosperity fund has returned 18.17%, 56.32% and 133.11% over one, three and five years, respectively, versus the sector’s 9.88%, 34.48% and 44.36%.
Meanwhile, the Aberdeen Asian Income fund has struggled in recent years, returning 7%, 24.6% and 16.5% over one, three and five years, respectively, versus the MSCI Asia Pacific ex Japan index’s 17%, 46% and 57%.
The Seneca Global Income & Growth trust has a strategic allocation of 35% to UK equities, 25% to overseas equities, 25% to specialist assets which includes Reits, infrastructure, asset leasing, direct lending, and private equity, and 15% to fixed income and cash.
