SCHRODER ASIAN TOTAL RETURN INVESTMENT COMPANY

Investment Process

The team believes that over the long term it is a company’s fundamentals which drive share prices. The managers have a huge investment universe, taking in companies listed on Asian ex-Japan stock exchanges as well as in Australia and New Zealand. The selection process begins with quantitative screens using valuation, momentum, and quality ratios such as dividend and cash flow yields. Alongside analyst grades the managers look for shareholder value creators where the return on invested capital is greater than average capital cost. They also want companies with sound balance sheets, professional management and capital allocation policies that are aligned with the interests of minority shareholders. When they have identified attractive stocks, they consider whether they should be hedged or not to protect against the risk of adverse price movements. This decision is based on long-term fundamentals including dividend and earnings yield as well as country specific risks. If a stock has upside to fair value and the country model is positive, then it will get a bigger weighting in the fund.