Stock Analysis & Valuation Schroder Investment Trust - Schroder AsiaPacific Fund plc (SDP.L)

• Previous Close: £696.00
• Sector Valuation Confidence Level: High

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	246.98	-65
Intrinsic value (DCF)	220.65	-68
Graham-Dodd Method	10.32	-99
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Schroder AsiaPacific Fund plc (SDP.L) is a UK-domiciled, close-ended equity mutual fund managed by Schroder Investment Management Limited, focusing on public equity markets across Asia (excluding Japan and the Middle East) and Far Eastern Pacific-bordering countries. Launched in 1995 and listed on the London Stock Exchange, the fund invests in diversified sectors, benchmarking against the MSCI AC Asia ex Japan (NDR). With a market cap of £733 million, it offers exposure to high-growth Asian economies, leveraging Schroders' expertise in emerging markets. The fund’s strategy targets long-term capital appreciation, appealing to investors seeking regional diversification. Its dividend yield of 12.5 GBp per share adds income appeal. As Asia-Pacific markets continue to expand, SDP.L provides a structured route to participate in this dynamic region’s growth, backed by Schroders’ robust asset management framework.

Investment Summary

Schroder AsiaPacific Fund plc (SDP.L) presents a focused play on Asia-Pacific equities, excluding Japan, with a moderate beta (0.68) suggesting lower volatility relative to broader markets. The fund’s £127.7 million net income and £12.5 dividend per share underscore its income-generating capability. However, its reliance on regional economic stability and currency risks in emerging markets may pose challenges. The absence of debt and £5.8 million cash reserves provide financial flexibility. Investors should weigh Asia’s growth potential against geopolitical and regulatory uncertainties. With Schroders’ stewardship, the fund is well-positioned for investors seeking targeted exposure, though its closed-end structure may lead to premium/discount fluctuations versus NAV.

Competitive Analysis

Schroder AsiaPacific Fund plc competes in the niche of Asia-focused closed-end funds, differentiated by Schroders’ deep regional expertise and active management. Its benchmark alignment with MSCI AC Asia ex Japan ensures transparency, while sector diversification mitigates single-market risks. The fund’s competitive edge lies in its seasoned management and Schroders’ broader research infrastructure, enabling selective stock-picking in volatile markets. However, its performance is tethered to Asia’s economic cycles, and its closed-end format may trade at NAV discounts, unlike open-end alternatives. Competitors like Fidelity Asian Values or Aberdeen New Dawn offer similar exposure but with varying fee structures and regional emphases. SDP.L’s lack of leverage is a conservative strength, but its dividend policy, while attractive, depends on consistent capital gains—a challenge in downturns. Its scale (£733M AUM) provides liquidity advantages over smaller peers, though passive Asia-ex-Japan ETFs (e.g., iShares) pose cost competition.

Major Competitors

• Fidelity Asian Values plc (FAN.L): Fidelity Asian Values (FAN.L) is a UK-listed closed-end fund targeting undervalued Asian equities (ex-Japan). It emphasizes small/mid-caps, offering higher growth potential but with elevated volatility. Its 0.9% ongoing charge undercuts SDP.L’s ~1.1%, appealing to cost-conscious investors. However, FAN.L’s concentrated portfolio (~50 holdings vs. SDP.L’s broader approach) increases idiosyncratic risk. Both funds share Schroders’ and Fidelity’s strong regional research, but FAN.L’s smaller AUM (£350M) may limit liquidity.
• Aberdeen New Dawn Investment Trust plc (ABD.L): Aberdeen New Dawn (ABD.L) invests across Asia-Pacific, including Japan, differentiating it from SDP.L’s Japan-exclusive mandate. Aberdeen’s value-oriented strategy and lower turnover may appeal to long-term investors, but its inclusion of Japan dilutes pure Asia-exposure. ABD.L’s 0.85% fee is competitive, though its recent underperformance versus MSCI benchmarks raises questions about stock selection. SDP.L’s dividend yield (12.5p) surpasses ABD.L’s 8.5p.
• Invesco Asia Trust plc (IAAS.L): Invesco Asia Trust (IAAS.L) focuses on high-conviction, growth-oriented Asian equities. Its 15% exposure to India (vs. SDP.L’s ~10%) taps into a faster-growing market but increases concentration risk. IAAS.L’s discount to NAV (~12%) is wider than SDP.L’s (~8%), suggesting relative undervaluation. Both funds employ gearing (IAAS: 10%, SDP: 0%), making IAAS.L more aggressive but vulnerable in downturns.
• Caspian Sunrise plc (CASP.L): Caspian Sunrise (CASP.L) is an outlier, focusing on Central Asian oil/gas rather than equities. Its high-risk, resource-centric profile contrasts sharply with SDP.L’s diversified equity approach. While CASP.L offers commodity upside, its lack of sector overlap makes it an indirect competitor at best.