30th Apr 2014 14:01
LONDON (Alliance News) - Witan Pacific Investment Trust PLC Wednesday said its most recently ended financial year was "disappointing" as the net asset value total return was a 6.5% fall, underperforming the benchmark due to being underweight in Japanese stocks.
In a statement for the year ended January 31, the trust said the shareholder total return was slightly better, down 5.2%, owing to a narrowing of the discount to NAV. The company's regional benchmark, the MSCI Asia Pacific Free index, which includes Japan, Far-Eastern Asia and Australia, was little changed over the year, with a total return of 0.2%.
The trust said that although Western stock markets had a buoyant year in 2013, the picture in Asia was much more variable.
"Japan performed well, rising 32%, which, allowing for the weakness of the yen still generated a total return in sterling of 14%. The rest of the region, which was affected by falling commodity prices and other problems specific to a number of local economies, generated a modest positive return of 2.8% in local currencies but fell 7.5% in sterling terms," the trust said.
"In 2013, Japan moved from being a laggard to leading in regional performance terms, as the new government of Prime Minister Abe pursued a radical policy of monetary easing in order to generate an economic recovery. This led to a rapid revival in Japanese company profits which the market anticipated and so rose rapidly," the trust said.
"By contrast, a number of other economies, such as China and India were undergoing slower growth, while other markets, notably Australia and Indonesia were adversely affected by lower commodity prices. At the same time, increasing hopes for quickening economic growth in Europe and the USA led to investor preference for these markets," the trust added.
Chairman Gillian Nott, who is stepping down at the company's annual general meeting after eight years in the role, said those themes "did not play to the strengths of our managers".
Nott said the managers' "more fundamentally driven investment style" is better suited to capturing longer-term corporate performance than responding to shorter term changes in investment mood.
The portfolio was underexposed to the strength in Japan, while stock selections elsewhere in general also failed to keep up with the market, Nott said.
"Looking to the longer term, we believe that the company offers an attractive investment vehicle for investment in Asia, which remains a region of immense opportunity as living standards rise and consumers obtain increased spending power," Nott said.
Sarah Bates is succeeding Nott.
The trust's shares were Wednesday quoted at 213.27 pence, down 0.5%.
By Samuel Agini; [email protected]; @samuelagini
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