Pacific Horizon unveils Asia’s growth potential

The Pacific Horizon Investment Trust [LON:PHI] aims to achieve capital growth through investment in the Asia Pacific region (excluding Japan) and the Indian sub-continent. The portfolio contains companies which have been identified as offering the potential for long-term capital appreciation, irrespective of whether they comprise part of any index.

Part of the Baillie Gifford stable, Pacific Horizon is managed by Roddy Snell and Ben Durrant. Snell has been with Bailie Gifford since graduation in 2006 and was promoted to partner last year. He’s been at the helm of Pacific Horizon since 2021, having earned his spurs as fund manager of the Baillie Gifford Pacific fund since 2010. His deputy, Durrant, joined Baillie from RBS in 2021 and joined Pacific Horizon Investment Trust last year.

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Given the broadness of the market, the fund has the mandate to invest across the region and aims to hold between 40 and 120 positions across APac, primarily in listed companies, although the investment trust has the mandate to invest up to 15% of the fund in private companies and as at the end of March, Pacific Horizon held five private companies, which in aggregate accounted for 7.8% of total assets.

According to the Association of Investment Companies (AIC), the trade body for the investment trust industry, Pacific Horizon had total assets of GBP610m, a market cap of GBP559.4m with a discount/premium percentage of -8.29% and gearing of 1%. The fund has ongoing charges of 0.72%.

Focused on the effect of technological change on economies

Launched in 1989, the fund is in the AIC’s Asia Pacific sector, and is benchmarked against the MSCI All Country Asia ex-Japan index. The fund’s portfolio is increasingly focused on the effect of technological change on economies and existing businesses, and as a result has a strong bias towards Semiconductors and Semiconductor Equipment, vital for the global digital economy; Technology Hardware, Storage and Peripherals and Metals and Mining (for materials that contribute to the technology industry).

Undoubtedly Asia has over the past two decades been the growth engine of the global economy, and the fund has rewarded its investors (on a NAV basis) over the past decade. Over one-year to end-March 2024 the fund returned 7%, beating the index by 4.89 percentage points. Although over three-years, Asia took a post-Covid tumble, returning -4.2%, the index came off worse at -10.8%.

Over five-years (on a NAV basis) is where the team at Pacific Horizon started to put some clear blue sky between it and the index, returning 105.9% a massive 90 percentage points ahead, and over 10-years, Pacific Horizon returned (on a NAV basis) 269.5% against an index return of 104.8%.

The two titans of the Asia-Pacific region are China and India, (number two and number five in world GDP rankings respectively) and unsurprisingly they took up the bulk of asset allocation with just shy of 50% of the portfolio between the two nations. However, Pacific Horizon has gone bullish on India, with a 27.8% allocation compared to a 22.1% allocation to the People’s Republic.

The next favoured nation was South Korea with a 19.4% allocation.

Pacific Horizon Investment Trust top five holdings

Source: Baillie Gifford, 31st March 2024

Asia is a continent of opportunity, that’s a fact, and the opportunities will not be diminishing any time soon. Given its strong record, the Pacific Horizon Investment Trust is an affordable and successful vehicle through which to get exposure to Asia’s compelling story.