Unfortunately, Questor’s view is that Asia Dragon, the biggest of the trusts to invest in large Asian companies, is not the one to back yet.
A merger last year with stablemate Abrdn New Dawn puffed Dragon’s assets to £680m and put it on the radar of more investors. Its shares look cheap at 15.8pc below asset value, but that reflects poor performance, with a return of just 2.7pc over five years as its “quality growth” style struggled in a market led first by tech stocks and then by “value” stocks that rebounded as economies reopened.
When better-performing competitors are available on average discounts of 11pc, Asia Dragon doesn’t look cheap enough. Rivals Invesco Asia, JP Morgan Asia Growth & Income, Pacific Assets, Schroder Asian Total Return and Schroder AsiaPacific all have their claims, but the one we’d back is the Baillie Gifford managed Pacific Horizon, the top performer over five and 10 years with returns of 85.7pc and 248pc respectively.
Like the others, the trust has suffered in the three-year downturn, but should benefit from the replacement this week of its lead manager, Roddy Snell, as co-manager on Baillie Gifford China Growth. That is good news for Pacific Horizon, where Snell, a pragmatic growth investor, can now focus his energies. On a wider-than-average 11.6pc discount, it’s the pick of the bunch.
Questor says: buy Fidelity China Special Situations, Pacific Horizon
Tickers: FCSS, PHI
Share price at close: 186.4p, 556p
Gavin Lumsden is editor of Citywire’s Investment Trust Insider website
Read the latest Questor column on telegraph.co.uk every Monday, Tuesday, Wednesday, Thursday and Friday from 6am
Read Questor’s rules of investment before you follow our tips
