Schroder Asian Equity Yield Fund The power of investing for dividends Morningstar rating as of 31 Jan 2015. Morningstar 2015. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Are you investing for capital growth, income or both? In this current climate of volatility, is it still a good time to move into Asian equities? Whatever your investment objectives, an Asian equity fund focusing on dividends can offer you attractive sustainable returns, with less volatility than a traditional Asian equity fund. Why an Asian dividend strategy? Dividend return tends to have a stronger correlation with existing economic conditions than price appreciation Companies that have high dividend payouts usually experience much faster subsequent earnings growth than their low dividend-paying counterparts Because dividends can only be paid out of real earnings and real cash flow, focusing on dividends helps investors avoid companies with dubious earnings
A sound strategy in the current market environment Why choose an Asian equity yield fund? Regular income an equity yield fund can offer you a steady stream of income, supported by the dividends paid out by companies in the portfolio. Performance over time, good quality stocks with high dividends often perform better than stocks that pay low dividends. This is because companies with higher dividends often have superior earnings prospects compared to their counterparts which pay lower dividends. High dividend yield stocks versus low dividend yield stocks in Asia Index Points (Logged) 180 160 140 120 100 80 1989 1991 1992 1993 1994 1995 1996 1998 1999 2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2012 2013 Basket of high-yielding stocks (Quintile 1) Asian universe mean Basket of low-yielding stocks (Quintile 5) Source: Citigroup, Schroders, as at June 2013. Reduced risk historically, over half of equity market returns have come from dividends. Therefore, one reliable way to invest in shares for the long term is through an equity yield fund. This is because a large proportion of total return is derived from dividends, making it less dependent on share price fluctuations. Dividends have historically been the largest component of long term equity returns MSCI AC Asia Pacific ex Japan Index 1000 800 600 400 200 0 Dividend Return Price Appreciation 62% of total return 38% of total return 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Factset, MSCI, IMF, Schroders, Dec 2014. Higher yields since the Asian crisis, many Asian companies have restructured and reduced their debt levels. They now have stronger balance sheets and lower gearing levels. Many Asian companies are also generating higher free cash flow and increasingly favouring dividend payouts as the preferred use of cash.
Your preferred route to tapping into Asian dividend stocks Why Schroder Asian Equity Yield Fund (the Fund )? Attractive monthly payouts the Fund aims to make attractive potential monthly payouts of 3% - 4% per annum*, offering a regular stream of income for investors. Intended monthly payout calendar for 2015 Month Record Date Payout Month Record date Payout January 30 Jan 2015 0.25% July 31 Jul 2015 0.25% February 27 Feb 2015 0.25% August 31 Aug 2015 0.25% March 31 Mar 2015 0.25% September 30 Sep 2015 0.25% April 30 Apr 2015 0.25% October 30 Oct 2015 0.25% May 29 May 2015 0.25% November 30 Nov 2015 0.25% June 30 Jun 2015 0.25% December 31 Dec 2015 0.25%-1.25% Unique investment strategy the Fund focuses on companies that create and grow shareholder value, which tend to pay out steady dividend streams and grow dividend payouts over time. It invests in a wellbalanced portfolio of stocks exhibiting at least one of following characteristics: Dividend cow steady dividend stream secured on stable earnings Dividend grower rising dividend stream driven by growth in earnings Dividend surprise rising dividend stream driven by improving payout ratio Performance Schroders Asian equity team has a solid track record for spotting promising opportunities. These are opportunities that we firmly believe have the potential to provide stable income and capital growth over the medium to long term. Performance of Schroder Asian Equity Yield Fund As at 31 Jan 2015 Schroder Asian Equity Yield Fund 3 Months % 6 Months % 1 Year % 3 Years (% p.a) 5 Years (% p.a) Inception (% p.a) 3.8 3.4 18.2 11.5 9.6 5.7 Peers Average 4.8 5.1 18.0 9.3 5.8 6.3 Relative Performance -1.0-1.7 0.2 2.2 3.8-0.6 Offer-to-Bid -1.4-1.8 12.2 9.6 8.5 5.1 Peer Group Ranking 27/44 28/43 23/43 13/43 7/41 20/33 Source: Morningstar, SGD, all dividends reinvested, taking into account all charges which would have been payable upon such reinvestment. Returns of more than one year are annualised. The Fund s date of inception is 14 Feb 2005. Past performance is not indicative of future returns. * It is the Manager s current intention to declare distributions of 3% - 4% p.a. of the net asset value per unit on monthly basis. The distributions are not guaranteed and might be changed at Schroder Investment Management (Singapore) Ltd s (the Manager s ) discretion in accordance with the trust deed of the Fund. Ordinarily, it will be reviewed annually. In the event of the Fund s total return being less than the intended distribution, distributions will be made from capital, subject to trustee approval. Prediction, projection or forecast of the distributions is not necessarily indicative of future or likely performance of the Fund.
Where the Fund is Invested Top 10 Holdings Country Sector Weight (%) SK Telecom Korea Telecommunications 4.2 HKT Trust and HKT Hong Kong Telecommunications 3.6 Hutchison Whampoa Hong Kong Industrials 3.5 Jardine Strategic Singapore Industrials 3.5 Taiwan Semiconductor Manufacturing Company Taiwan IT 3.1 Jardine Matheson Holdings Singapore Industrials 3.0 Commonwealth Bank of Australia Australia Financials 3.0 Hongkong Land Holdings Hong Kong Financials 2.9 Brambles Australia Industrials 2.9 Land and Houses Public Company Thailand Financials 2.8 Symbols representation: Dividend Surprise Dividend Growth Dividend Cow Sector Allocation Geographical Allocation Information Technology 15.1% Financials 31.8% Telecommunication services 14.6% 14.0% Industrials 7.6% Consumer Discretionary 6.6% Materials Energy 4.5% Consumer Staples 1.5% Utilities 1.4% Health Care 0.8% Cash & Equiv 2.1% Australia 24.8% Hong Kong 28.7% Taiwan 13.9% Korea 5.9% China 4.9% Thailand 4.7% Singapore 4.1% India 3.6% Philippines 1.7% Indonesia 1.6% United Kingdom 1.6% Malaysia 1.1% Cash & Equiv 3.4% Source: Schroders, as at 31 Jan 2015. The above does not represent a recommendation to buy or sell any securities. Despite the market s obsession with share price appreciation, historically almost two-thirds of long term equity returns in Asia have come from dividends. Lee King Fuei, Fund Manager, Asian Equities
Fund Details Schroder Asian Equity Yield Fund (SGD) Schroder ISF Asian Equity Yield (USD A Acc) Also available: Schroder ISF Asian Equity Yield (USD A Dis) Investment Objective Reference Benchmark To provide capital growth and income through investment in equity and equity related securities of Asian companies which offer attractive yields and sustainable dividend payments. To provide a total return primarily through investment in equity and equity related securities of Asian ex Japan companies which Schroders believes offer attractive yields and sustainable dividend payments. MSCI AC Pacific Free ex Japan Gross Index Inception Date 14 Feb 2005 11 Jun 2004 Fund Currency SGD USD Launch Price S$1.00 US$10.00 Minimum Subscription Amount S$1,000 US$1,000 or its near equivalent in any other freely convertible currency Mode of Subscription Cash, CPF-OA & SRS Cash Initial Sales Charge Annual Management Fee Up to 5% of gross investment sum 1.5% p.a. Bloomberg Ticker SCHEQYF:SP SCHAEYA:LX SCHAEAD:LX ISIN Code SG9999001846 LU0188438112 LU0192582467 Payout Frequency Monthly N.A. Monthly Dealing Frequency Fund Size as at 31 Jan 2015 S$464.9 million US$2.4 billion Daily Important Notes This document is prepared by Schroders for information and general circulation only and the opinions expressed are subject to change without notice. It does not constitute an offer or solicitation to deal in units of the Fund and does not have any regard to specific investment objectives, financial situation or particular needs of any specific person who may receive it. Investors may wish to seek advice from a financial adviser before purchasing units of the Fund. In the event that he chooses not to seek advice from a financial adviser, he should consider carefully whether the Fund in question is suitable for him. Past performance of the Fund or the manager, and any economic and market trends or forecast, are not necessarily indicative of the future or likely performance of the Fund or the manager. The value of units in the Fund, and the income accruing to the units, if any, may fall as well as rise. Investment in units of the Fund involves risks, including the possible loss of the principal amount invested. Investors should read the prospectus, available from Schroders or its distributors, before deciding to subscribe for or purchase units in the Fund. The Fund may use or invest in financial derivatives, and the net asset value of the Fund is likely to have high volatility due to its investment policies or portfolio management techniques. The CPF interest rate for the CPF-OA is based on the 12-month fixed deposit and month-end savings rates of the major local banks. Under the CPF Act, the CPF Board pays a minimum interest rate of 2.5% per annum when this interest formula yields a lower rate. The interest rate for the Special and Medisave Accounts ( SMA ) is pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, or 4% whichever is the higher, adjusted quarterly. The interest rate to be credited to the Retirement Account ( RA ) is the weighted average interest rate of the entire portfolio of Special Singapore Government Securities (SSGS) the RA savings are invested in which earn a fixed coupon equal to the 12-month average yield of the 10YSGS plus 1% at the point of issuance, or 4% whichever is the higher, adjusted yearly. As announced in September 2014, the Singapore government will maintain the 4% p.a. minimum rate for interest earned on all SMA and RA monies until 31 December 2015. Thereafter, interest rates on all CPF account monies will be subject to a minimum rate of 2.5% p.a.. In addition, the CPF Board will pay an extra interest rate of 1% per annum on the first S$60,000.00 of a CPF member s combined balances, including up to S$20,000.00 in the CPF-OA. The first S$20,000 in the CPF-OA and the first S$40,000 in the CPF-SA are not allowed to be invested under the CPFIS. Investors should note that the applicable interest rates for each of the CPF accounts may be varied by the CPF Board from time to time. Published: February 2015 Schroders Reg. No. 199201080H