Pacific Assets Tst - Results analysis from Kepler Trust Intelligence

Pacific Assets (PAC)

30/04/2025

Results analysis from Kepler Trust Intelligence

Pacific Assets (PAC) has released its financial results for the year ending 31/01/2025. Over the year, the trust saw its NAV increase by 9.7% on a total return basis, which compares a return of 22.3% for the trust's comparator benchmark, and 15.6% for the average of the peer group. PAC also beat its alternative performance measure, UK CPI +6%, which rose 8.8% in the same period.

As a result, the trust has now delivered positive absolute returns in eight of the past nine financial years. This has contributed to strong long-term cumulative outperformance, with PAC having returned 52.1% over five years to 31/01/2025, versus the benchmark return of 27%.

This track record reflects managers', Doug Ledingham and David Gait's, strong focus on risk. However, this can lead to the trust lagging in market rallies. In the financial year, relative performance was primarily driven by the overweight to India and underweight to China allocations.

Doug and David added to their China allocation during the year which had been less than 1% in previous years. This consists of eight high quality companies. Economic exposure to the country is much higher across the portfolio. As a result, turnover increased by circa a third as the managers found several new, long-term opportunities.

PAC's average share price discount over the year was 11.5%, wider than any average of the past five years. The board began buying back shares in the second half of the year and have continued since.

The trust's revenue rose in the year enabling an increase in the dividend.

The managers will be swapping roles effective 01/07/2025, as part of a natural evolution.

Chairman Andrew Impey reflected on the market background, stating the managers' "approach is well-suited to delivering sustainable value for shareholders, even in a more complex and fast-evolving regional landscape".

Kepler View

These results mark a return to strong absolute returns for Pacific Assets (PAC). Whilst relative performance is behind the benchmark, the trust did outperform its alternative inflation goal (as measured by CPI +6%), and is cumulatively ahead of both comparators over the long-term. We believe this risk-managed approach could offer interest amongst the current geopolitical issues, by providing investors a way to manage potential volatility whilst offering exposure to the Asian growth story.

This opportunity is enhanced by the current discount in our view. The trust traded at a wide average discount during the year, and since, which we believe reflects broader sentiment towards the region, and doesn't account for the trust's risk-focussed approach. Furthermore, much of the negativity surrounding Asia is arguably priced into markets, therefore - and with the proviso that nothing is guaranteed and this is a volatile market - the trust could easily surprise to the upside from here. 

Doug and David's recent additions could support this recovery. They have added to China over the year, capitalising on depressed valuations to purchase high-quality companies at attractive valuations. We believe this demonstrates their willingness to look at all opportunities, so long as they pass their strict quality criteria, and it adds a bit more balance to the portfolio. China has performed well in the past few months which could support PAC's absolute returns should this continue in 2025.

CLICK HERE TO READ THE FULL REPORT 

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.