Aberdeen Asia Smaller Companies Trust

[Asmerom]

Maybe some of you know that the English Antony Bolton of Fidelity Special Situations fame has started an Investment Trust , namely "Fidelity China Special Situations" and the share price now exceeds the NAV by 12%.

http://www.citywire.co.uk/money/boltons-china-trust-considers-issuing-more-shares-to-meet-demand/a445902

In a statement last night the Board of the Trust said:

‘Due to the consistently high levels of market demand, the shares of the company are currently trading at a significant premium to their net asset value. The board are therefore currently considering ways in which this demand can be satisfied. ’Simon Elliott, analyst at Winterflood Investment Trusts, expected the trust would mount a new 'c-share' issue to lower the share price and hence reduce the premium.

Does this mean what it appears to mean ; that the presently quoted share price of £1.26 may well drop 12%? I don't understand the concept of the "new c-share issue" and wonder if this somehow allows present holders of the shares to escape this calamity. Although the price has recently faltered there's no great sell off. Should I sell, that's the question.

[nong38]

Adam Boulton was at Fidelity, took a sabatical, came back from retirement and decided to set up this China job, I was bombarded with stuff. He had a good record at Fidelity, but to me was not long studying the China project before it kicked off, obviously a lot of admires on board with this one, I did not follow, everyone is doing well now, will it be the same when China runs out of steam? He may be caught short. I went for Aberdeen Asia. Pacific ex Japan instead. I would steer clear of it,but, there are sites you can compare performance free, Bestinvest.co.uk have a look, dont be too quick to follow the heard.

[SantiSuk]

When the new Trust was launched there would have been a fixed number of shares authorised for issue. If demand is high when all the shares are sold it pushes up the price of individual shares to a level where they exceed NAV, thus creating a premium.

The answer is to issue more shares to satisfy the pent-up demand - either shares of the same class as yours or some new category (I'm not sure what 'c' shares are).

You should not lose out - if the Trust sells new shares then the Trust gets money for them which boosts the total NAV so that your apparent dilution (you have a lower proportion of the total number of shares now) is compensated.

The Trust is a regulated UK Investment Trust and it will have to satisfy the authorities that a new issue is fair. You can also rely on the fact that existing institutional shareholders will jump all over the Directors if there is an attempt to dilute existing shareholder value.

If you want to be sure then telephone the Investment Trust company or manager and get them to send you the documents explaining the new share issue (you might get them automatically anyway). You can get the telephone number from the Trustnet website - the performance 'bible' website for all UK Investment Trust and Unit Trust investors.

Personally I wouldn't touch this faddish Anthony Bolton Chinese IT with a barge pole. Just cos the guy has done great stuff with a UK special situations trust does not mean he can call the market in China. I prefer to stick with Aberdeen's range of Asia-Pac ITs that have a strong China element (as well as a goodly content of other strong Asia-Pac markets like Thailand and Indonesia). Hugh Young knows more about Asia-Pac than Anthony Bolton is likely to be able to absorb in the remainder of his lifetime.

[rgs2001uk]

Dont know if the OP is in Thailand or not which may be a factor in what he holds.

Did the OP choose this fund himself or was it recommended by one of the "independant financial" gurus that operate in Thailand?

I hold nothing in Aberdeen, I feel there are better options, Witan Pacific or Henderson Far East are two that spring to mind.

Within the Aberdeen choice either Aberdeen All Asia or Aberdeen Asian Income are two I would consider before the Smaller Companies that the OP holds.

Years ago I held Aberdeen Capital Growth that were bought in Thailand, I seem to remember HSBC were pushing them at the time, but sold the lot in 2004

after the SET performance of 2003.

Funny SantiSuk should mention Hugh Young (isnt he ex Baillie Gifford?), you should listen to him, just for the entertainment value alone.

I agree with the two previous posters, at the end of the day, you pay your money and take your chances.

[Asmerom]

You should not lose out - if the Trust sells new shares then the Trust gets money for them which boosts the total NAV so that your apparent dilution (you have a lower proportion of the total number of shares now) is compensated.

Personally I wouldn't touch this faddish Anthony Bolton Chinese IT with a barge pole. Just cos the guy has done great stuff with a UK special situations trust does not mean he can call the market in China. I prefer to stick with Aberdeen's range of Asia-Pac ITs that have a strong China element (as well as a goodly content of other strong Asia-Pac markets like Thailand and Indonesia). Hugh Young knows more about Asia-Pac than Anthony Bolton is likely to be able to absorb in the remainder of his lifetime.

Many thanks for that reassuring clarification about the technicalities behind the Fidelity China Trust"s possibly issuing new shares and I will take your advice and give them a ring to confirm.

I'm surprised you dismiss the much revered guru but understand your scepticsm. I get mesmersed by resutls and i'm happy to say my barge pole is nowhere near as long as yours and consequently I'm looking at a nice little gain of 30% over 6 months in Anthony's FCSS compared with the rotund Hugh's Aberdeen Asia Pacific's 15%. Of course the AAS Asian Pacfic Smaller Co. Inv. Trust's figures are even better : at 50% over 6 months and 90% over one year.

I know figures can be bandied about for ever and these Fund Managers do go up and down the tables like yoyos so I'll leave it at that and repeat my thanks for your help.

[pagan1]

Had a punt on Aberdeen's New Thai IT at the begining of the year which has worked out well and would have also put some in the All Asia IT but for a glitch in buying online at the time. As a result ended up in the New India IT which has done somewhat better than the All Asia IT.

As stated though you pays your money ............. unfortunately sometimes you also have some in ROK

[Asmerom]

Dont know if the OP is in Thailand or not which may be a factor in what he holds.

Did the OP choose this fund himself or was it recommended by one of the "independant financial" gurus that operate in Thailand?

I hold nothing in Aberdeen, I feel there are better options, Witan Pacific or Henderson Far East are two that spring to mind.

Within the Aberdeen choice either Aberdeen All Asia or Aberdeen Asian Income are two I would consider before the Smaller Companies that the OP holds.

Funny SantiSuk should mention Hugh Young (isnt he ex Baillie Gifford?), you should listen to him, just for the entertainment value alone.

I agree with the two previous posters, at the end of the day, you pay your money and take your chances.

I'm in Thailand and I chose them all on my own. I commiserate with your Aberdeenless situation.

(I tried to paste a table copied from Hargeaves Lansdown here but in previewing this post it gets all scrambled up. So, no table).

So you recommend : WITAN PACIFIC which rises 11% ,29%,21% and 52% over 6,12,36 and 60 months rather than ---

ABERDEEN ASIAN SMALLER COMPANIES with figures of 50%,90%,132%,and 167%?

Henderson's Far East figures are : 13%,22% and 43% over 6,12 and 36 months. "You pay your money and take your chances"

I simply don't understand the logic behind recommending underperfoming vehicles. Is there any? Am I missing something? I'm certainly no expert.

Hugh Young graduated in POLITICS at Exeter university.

Many thanks for the advice.

[SantiSuk]

Some fair comments in reposte to my post. I agree that the China Trust has done well on its introduction as the hot money poured into it. You have to understand premiums/discounts and what causes them when choosing Investment Trusts. If a trust is popular that pushes the price up (unlike a unit trust) so that the apparent performance is better than the underlying asset performance.

Better to look at the NAV (net asset value) performance if you want to assess the manager. Probably difficult to do for the China Trust as it is so new. But you do need to also look at the way the discount/premium is moving as it may give a clue to an undervalued or overvalued Trust.

Maybe the China Trust is still a clear leader on an NAV basis, I haven't looked (and you might justifiably therefore say how the hel_l can you comment then which would also be a fair comment!). I would guess that the China Trust is on a high premium and, after 30 years investing pretty much solely in Investment Trusts, I have learnt to avoid high premium shares unless its in a Trust that I have held a long time and have grown to know and love. Careful bottom fishing of Trusts that have fallen out of favour with above average discounts is what I tend to do for any new or recycled money.

Nice to know that there are other Investment Trust fans out there. It's only now becoming recognised as the hidden gem area of investing in equities, having been outshouted by commission paying (to advisers and by you!) unit trusts and other open-ended vehicles for many decades.

[i graduated in politics at Essex University - what are you trying to tell me Asmerom ]

[rgs2001uk]

I had forgotten about this thread, good to see SantiSuk revive it.

One thing I have learned over the years, a fund is only as good as it's fund managers, check out the Gartmore situation.

I also believe in the hare and the tortoise scenario as recounted by John Newlands in the latest edition of Taking Stock issued by Alliance, I quote,

"In a classic personification of the tortoise and the hare,in short,large generalist investment trusts tend to chug along behind the scenes,

taking up diversified exposure not just to the "sector of the moment" but to a spread of investments seen as offering value over the medium or longer term.

In doing so will typically only capture some of the upside of whatever happens to be the present vogue-but also avoid the eye-watering negative returns

when sentiment reverses or a new market trend emerges."

I hold a base of boring, underperforming some may say Investment Trusts, I prefer to call them plodders, they just plod along, they arent subject to wild fluctuations,

which means I wont get rich overnight, but I also wont lose my ass overnight, these have been held long term.

Examples include, Alliance,Monks,Scottish Mortgage,Witan and Law & Debenture, these are the base of my IT portfolio, I also hold Henderson FE and Witan Pacific.

As mentioned by SS, why are these now trading at a premium, is it Western money flowing into the region by some fund manager willing to take a punt, or is the price being driven by strong sustained performance over the long term?

My IT's are held for the long term, I dont have the inclanation to sit at a computer screen watching performance charts and buying and selling on a daily basis.

I can also afford myself the luxury of sleeping at night because I havent been caught up in the latest fad, I remember being bombarded with literature years ago

trying to get me to invest it the latest hot spot, Peru I seem to recall, the Inca Growth Fund or something like that, I declined.

Whilst I agree with Asmeron, the figures he quotes are impressive, and Asia is the place to be at the moment, however I wouldnt be investing everything I have trying to make my fortune. By all means hold Asian stocks as part of a well balanced portfolio.

My days of taking risks are over, been there done that, my concern these days is to preserve what I have and achieve capital growth over the longer term.

The IT's I hold have endured over the long term, old established companies, and I feel sure they will still be there in 15 years when I start to cash in.

But hats off to Asmeron for highlighting Aberdeen, they must have slipped under my radar, I had forgotten all about them.

I may even have a punt myself on one of the other Aberdeen trusts I mentioned earlier, its either Aberdeen, BP or Xstrata shares, decisions decisions.