Excellent performance year to date and beyond: abrdn Asia Focus

AAS has delivered excellent performance year to date and beyond…by Ryan Lightfoot-Aminoff

Overview

The managers of abrdn Asia Focus (AAS) have expertly navigated near-term volatility to deliver strong returns year to date, in both absolute and relative terms. This has contributed to the trust’s considerable long-term outperformance of its benchmark, primarily driven by stock selection (see Performance).

This has come despite numerous macro headwinds, although the managers have capitalised on these to make some slight changes to the Portfolio. They have continued to focus on quality companies and used the volatility to add at more attractive valuations. The managers have also trimmed those that have performed well, leading to a slight pickup in cash levels, which has supported changes in the Gearing facilities, as well as share buybacks.

The share buybacks are being undertaken to help narrow the trust’s current Discount. Despite narrowing slightly in 2025 following strong performance, the discount is still only slightly narrower than its own five-year average at 13.8%.

AAS has a progressive Dividend policy, aiming to provide a modest and growing income from an asset not typically associated with one. The dividend payout has been more than covered by revenue in the past few years, enabling special dividends to be paid, as well as supporting growth of substantial revenue reserves. The current ordinary yield is c. 2%.

Following the maturity of its CULS facility, AAS has simplified its Gearing facilities. The managers now have access to a combination of fixed and floating rate borrowings, offering flexibility, and have a net gearing level of c. 9.4% at present.
 

Kepler View

 
AAS has been a standout strong performer so far in 2025. Given the macro backdrop of tariffs, in which Asia was heavily targeted, investors may be surprised that Asian smaller companies have proved resilient, although we believe this demonstrates that the domestic growth story remains intact. AAS has notably outperformed this, driven by excellent stock selection and prudent timing of Portfolio changes by the current three-strong Management team, which in our view demonstrates the strength of the process. Whilst this team is soon to change, we believe Gabriel’s longevity on the trust, the consistency of the process and the support of the wider analyst team are encouraging for future performance.

Moreover, we believe the near-term and longer-term performance supports the diversification benefits of Asian smaller companies. The factors driving the region are often very different to other asset classes, meaning AAS arguably offers a distinct performance profile that can be useful as part of a wider portfolio.

This opportunity could be enhanced when considering AAS’s Discount. We believe the current level, which is slightly narrower than the five-year average, doesn’t reflect the strong NAV performance year to date, and instead reflects an abundance of caution towards the asset class due to wider geopolitical issues. As such, we believe there is scope for the discount to narrow from here, should investors recognise AAS’s strong performance so far this year.

Bull

Bear

 
See the full research on AAS here >
 

 

_Disclaimer

_{This is a non-independent marketing communication commissioned by abrdn. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}