Scottish Oriental Smaller Cos Trust (LON:SOST) is a well-established Asian trust investing in small-cap companies in the region, excluding Japan and Australasia. Following the 2015 division of First State Stewart into two companies, SST comes under the umbrella of FSS Asia and continues to be managed by Wee-Li Hee, working alongside Martin Lau and Scott McNab. Stocks are selected on a bottom-up basis with a focus on quality companies with good long-term growth prospects. The portfolio is conservatively run with a view to preserving/increasing capital rather than outperforming a benchmark.
Investment strategy: Quality, long-term investment
Stock selection is bottom up rather than macro driven and, as a result, sector and geographic exposure may vary considerably from the benchmark. The manager seeks to invest in reasonably priced Asian small-cap companies that have strong franchises, solid balance sheets, robust cash flows and where managements’ interests are aligned with shareholders. There is a large emphasis on proprietary research and meeting with company management teams is a key part of the research process. Intrinsic values of potential investments are calculated, with a view to being realised over three to five years.
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