The Scottish Oriental Smaller Companies investment trust, run by First State Investments, has introduced a facility which would allow it to repurchase 15% of its share capital.
The move will help control the trust’s discount, which has narrowed massively over the last two years.
According to research compiled by Winterflood Securities (Wins), the trust’s discount to net asset value has averaged 9.3% over 10 years and 8.8% over the past 12 months.
However it now stands at 3.6%, down from 12.5% in June last year and about 20% in 2009.
Rippingall says the trust’s discount has narrowed following strong performance. Over the past couple of months, she took profits in Indonesia, the Philippines and Malaysia.
“Normally, Asian markets trade at a discount to the world but now they are at a premium,” she says. “Normally smaller caps are trading at a discount to large caps but this has almost closed.” (article continues below)
James Brown, an investment trust analyst at Wins, says the trust, managed by Susie Rippingall, has been one of the best performers in the Far East sector.
“She is supported by a strong team at First State,” says Brown. “Her relative performance against the [MSCI All Countries Asia Pacific ex Japan] index has been excellent.”
First State says the trust’s outperformance relative to the index was largely the result of an exposure to smaller companies, which have recently achieved higher returns than their larger counterparts.
John Newlands, the head of investment trust research at Brewin Dolphin, says the performance is the result of “a powerful combination” of Rippingall and Angus Tulloch, the joint managing partner, Asia Pacific and global emerging markets equity team.
“Tulloch is directing the strategy from Edinburgh, while Rippingallis based in Hong Kong,” Newlands says. “She has quite a lot of freedom selecting stocks of smaller companies.”
The trust has total assets of £187.1m and a market capitalisation of £176.1m.