Increased investment fund flows into Asian markets from US investors diversifying their portfolios w...
Increased investment fund flows into Asian markets from US investors diversifying their portfolios was a major reason Hugh Young's Aberdeen New Dawn investment trust outperformed its benchmark by 17% for the year ended April 2002.
Richard Clough, chairman of the trust, said the flow of funds materially impacts smaller equity markets and these have increased as US investors are diversifying into emerging markets, favouring Asia over the troubled Latin America region.
On the back of this, in the 12 months to 30 April 2002, New Dawn's NAV rose by 23.4% against a rise of 6.4% in its benchmark, the MSCI AC Asia Pacific Free ex-Japan index.
Because of this, and the fact the share price rose to 25.9p, the board of the trust is proposing to increase the dividend by 13% to 3p.
Clough said: 'Interest in Asian markets has increased significantly becsue such problems in the US have made investors realise Asian corporate governance and transparency has improved significantly in the past few years. Valuations are well below those of more mature markets, yields are greater and GDP growth is significantly higher.'
Looking ahead, Clough said, GDP growth is expected to pick up in the region as a whole to more than 5% in the trust's current fiscal year, principally driven by the growth of domestic consumption, a change from the technology-led export growth of recent years.
This, he added, is what led to the high growth rates in the past but should be more sustainable this time.
Clough added: 'Prospects for Asia, subject to the US not imploding, look better than for several years and I believe the trust is well positioned to capitalise on them.'
Over one year to 15 July 2002, the trust is ranked fourth out of 14 in the Far East ex-Japan sector, returning 20.2% compared to the sector average return of 6.5%.