The Scottish Oriental Smaller Companies Trust plc (LON:SOST) was launched in 1995 with the objective of generating long-term capital growth from investing in smaller companies listed in Asia (excluding Japan and Australasia). Its long-term 10-year performance record continues to be strong, although in more recent years SST has lagged the performance of the comparative MSCI AC Asia ex-Japan Index, which has been driven by large-cap and technology stocks in particular. Since Vinay Agarwal became acting (now formal) lead manager in July 2016, the portfolio has become more concentrated and growth orientated. Agarwal believes the trust is well positioned with reasonably valued, quality companies that can grow structurally through economic cycles.
Investment strategy: Fundamental stock selection
SST’s investment objective is to achieve long-term capital growth by mainly investing in smaller Asian-listed companies, excluding Japan and Australasia. Its approach is bottom-up, aiming to identify high-quality, well-managed companies in which it can invest with a five-year or longer time horizon. The manager and a well-resourced equity team conduct over 1,000 direct company meetings a year as part of their analytical, absolute return mindset approach. There are no sector and country weighting constraints. Since Agarwal became acting (now formal) lead manager, the portfolio has become more concentrated with around 60 holdings, with more focus on stocks with structural growth potential.
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