A new wave of growth is building across Asia, bringing with it a range of original and compelling opportunities for investors. With more than 40 years of experience in Asian equities, our fund managers know how to uncover innovative investment ideas that are often overlooked. Through Invesco Asia Dragon Trust (IAD), we’re giving investors direct access to these ideas, which can also help to bring genuine diversification to an investment portfolio.
*Please read the Investment risks at the bottom of the page.
It’s unsurprising that Asia is piquing the interests of investors, as the stars have been aligning for some time. The region is already established as a global manufacturing hub and centre of technological innovation critical to the growing digital economy. But while many Asian countries have already witnessed economic growth far outstripping the UK over the last 10 years, we think this is just the start.
We believe the region is on the cusp of another exciting phase of growth driven by domestic consumption. The next wave of profitability could be driven by rising incomes, favourable demographics and a fast-emerging middle-class keen to access the goods and services already enjoyed in more developed economies. Meanwhile, better corporate financial discipline has built greater resilience to external economic and geopolitical shocks, attracting more investment by rewarding long-term investors with rising dividends and strong capital growth.
On top of this, Asian economies are receiving an injection from government policies. Key countries, such as China and South Korea, have introduced positive measures to boost innovation and domestic demand, and encourage greater corporate discipline aimed at benefiting shareholders. More than ever, it feels like the region is really on the cusp of something exciting.
There’s a Chinese proverb that neatly encapsulates the way we manage Invesco Asia Dragon Trust: People’s prosperity depends on diligence. Given that maintaining wealth is as important as growing it, our entire process is underpinned by a disciplined, research‑led approach. This is the foundation of our strong track record in uncovering compelling opportunities while carefully managing risk.
We build the portfolio around the opportunities we believe in most – innovative companies with strong future potential that may not yet be recognised by the market. Our research digs into their business drivers, from product demand and pricing power to market share growth, cash flow, and management strategy. This keeps us disciplined on price, avoiding overpayment and unnecessary risk.
While markets will always rise and fall, our approach means we don’t get hung up on trying to predict economic policy or geopolitics beyond our control. Instead, we focus on uncovering true innovation and potential by assessing each Asian investment on its own merit.
It doesn’t stop once we’ve chosen an investment. We constantly review each position, meeting hundreds of companies each year, and when one stops progressing as we would hope – whether in innovation or valuation – we sell. This is how we aim to keep the portfolio fresh and future‑ready, holding only what we view as the most forward‑thinking businesses.
Diversity is key to any investment portfolio, where holdings across a mix of regions, companies and industries helps to reduce risk. Sticking to familiar markets like the UK and the US may feel safer, but actually it can focus your risk on a narrow range of stocks. A UK-only portfolio, for example, would have certainly seen its growth potential reduced over the last decade, due to political and economic uncertainty. We think the story looks very different in Asia.
We are not constrained by where we can invest. Invesco Asia Dragon has freedom to pursue long-term investments throughout this vast region. Our investment managers carefully select what they see as the best opportunities across markets as diverse as China, South Korea, Taiwan, India and Indonesia. At any one time, the portfolio might include banks, logistic firms, and technology or retail companies (to name but a few), as we run a diversified portfolio of shares that we think can grow, whatever the economic and political backdrop.
An investment trust is “closed-ended” – meaning there are a limited number of shares. This means our managers can take a long-term view, because we aren’t compelled to sell investments to raise money when markets become challenging and unpredictable. We can also seize opportunities quickly using a small amount of borrowing, and we’re not forced to sell other good investment ideas just to raise cash. Also, an investment trust is a company that is overseen by (and is accountable to) an independent Board of Directors, so investors can be sure the portfolio is being managed in their best interests as a shareholder.
Through our active, disciplined investment approach, our objective is to provide long-term capital growth and income by investing in a diversified portfolio of Asian and Australasian companies. Given the large size of the trust, we are able to offer this at a highly competitive management fee.
IAD has become the go-to investment for those wanting in on Asia’s exciting potential. Offering genuinely differentiated investment ideas and access to Asia’s next wave of profitability, the door to opportunity is wide open. Enter Invesco Asia Dragon Trust - where innovation is a mindset.
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So far this year we have seen one of the strongest periods for momentum on record. This presents risks, and we are proceeding with caution.
