Scottish Oriental Smaller Companies (SST) aims to identify high-quality Asian businesses with market-leading positions and strong balance sheets which can grow faster than the market over the long run. The strategy has a track record of generating good returns after global economic crises. As we discuss in Performance, it has done well in 2021 so far too. SST has been run to the same basic strategy by the same team at FSSA since launch in 1995 but has been revivified in recent years under lead manager Vinay Agarwal, who has cut out lower conviction holdings and concentrated the portfolio in the team’s best ideas. The board and manager agreed on a number of changes in 2020 to improve on previously sluggish performance. This includes taking out structural Gearing for the first time in many years and formalising Martin Lau’s position as co-manager. As we discuss in the Portfolio section, SST’s portfolio is now much more concentrated and shows attractive financial characteristics, with particularly strong earnings growth expected over the next two years. The team report that their businesses have shown operational resilience through the crisis and have used the crisis to take market share from weaker competitors. The managers say they think the portfolio is better positioned than it has ever been – and we note the team collectively increased their personal shareholdings significantly over the latest financial year. The discount remains wide at 10.8% (at the time of writing), although this is narrower than the 13% five-year average. The board has been supporting the share price with regular buybacks and has announced a tender offer to be held every five years conditional upon performance versus the MSCI AC Asia ex Japan Small Cap Index (see Discount).