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Disciplined Asia specialist, solid long-term returns

Invesco Asia Trust 19 March 2019 Review
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Invesco Asia Trust

Disciplined Asia specialist, solid long-term returns

Investment trusts

19 March 2019

Price

292.0p

Market cap

£205.8m

AUM

£225.8m

NAV*

306.7p

Discount to NAV

4.8%

NAV**

309.1p

Discount to NAV

5.5%

*Excluding income. **Including income. As at 15 March 2019.

Yield (based on FY18 dividend)

ba

1.9%

Ordinary shares in issue

70.5m

Code

IAT

Primary exchange

LSE

AIC sector

Asia Pacific ex-Japan

Benchmark

MSCI AC Asia ex-Japan

Share price/discount performance

Three-year performance vs index

52-week high/low

296.5p

243.0p

335.4p

281.0p

**Including income.

Gearing

Gross*

2.9%

Net*

2.9%

*As at 31 January 2019.

Analysts

Helena Coles

+44 (0)20 3077 5700

Mel Jenner

+44 (0)20 3077 5720

Invesco Asia Trust is a research client of Edison Investment Research Limited

Invesco Asia Trust (IAT) aims to provide significant capital returns over the long-term through investing in listed companies in Asia. It follows a rigorous bottom-up investment process with few constraints, to build a relatively concentrated 50–70 stock portfolio representing the manager’s highest-conviction ideas over a three- to five-year horizon. The approach also emphasises the valuation discipline and favours cash-generative companies, which is reflected in the underlying portfolio yield of c 3%. IAT has increased its annual dividend in seven out of the past 10 years and over that time has delivered an annualised NAV total return of c 16%.

12 months ending

Share price
(%)

NAV
(%)

Benchmark*
(%)

MSCI World
(%)

FTSE All-Share
(%)

28/02/15

25.2

25.5

18.0

17.6

5.6

29/02/16

(7.8)

(9.2)

(13.2)

(0.7)

(7.3)

28/02/17

45.8

51.1

42.1

36.6

22.8

28/02/18

19.4

17.1

19.5

6.6

4.4

28/02/19

(3.8)

(4.8)

(4.7)

4.6

1.7

Source: Refinitiv. Note: All % on a total return basis in GBP. *Benchmark is MSCI AC Asia Pacific ex-Japan until 30 April 2015 and MSCI AC Asia ex-Japan thereafter.

The market opportunity

The MSCI AC Asia ex-Japan index has risen c 10% since the beginning of the year. Coupled with moderating earnings expectations, P/E valuations have returned to their long-term averages, although Asian equities are trading at a 9% discount to global equities. Economic growth in the region is expected to significantly outpace that of the global economy, which should underpin its medium- to long-term investment prospects. In the near term, the direction of equity markets is likely to be influenced by geopolitical developments, such as the US-China trade dispute.

Why invest in Invesco Asia Trust?

Well-established trust, investing in Asia since 1995, managed by an experienced and stable team, led by Ian Hargreaves.

Strong long-term performance track record.

Tried and tested rigorous bottom-up investment approach.

Flexible mandate allows the manager to focus on his highest-conviction ideas.

Proactive board, committed to managing the discount.

Scope for discount to narrow

IAT is trading on a discount to ex-income NAV of 4.8%, which is below the three-year average of 10.6%. The board has a proactive approach to managing the discount and, under the new chairman Neil Rogan, has recently taken measures to broaden the trust’s appeal. These include the introduction of an interim dividend (2.8p per share) and a tiered fee structure, reducing the fee for assets over £250m. The board also aims to raise the trust’s profile, including increased direct engagement with individual investors. These efforts could help narrow the trust’s discount.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

IAT’s objective is to provide long-term capital growth by investing in a diversified portfolio of Asian companies. On 1 May 2015 the trust adopted a new benchmark, MSCI AC Asia ex-Japan, in place of the former benchmark, MSCI AC Asia Pacific ex-Japan. While the new benchmark excludes Australasia, the trust may still invest in these markets.

17 December 2018: interim report for six months ending 31 October 2018. NAV TR -10.5% versus benchmark TR -11.0%. Share price TR -10.8%.

17 December 2018: declaration of first interim dividend of 2.8p per share.

31 July 2018: Carol Ferguson retired as chairman and was replaced by Neil Rogan at AGM.

28 June 2018: annual report for 12 months ending 30 April 2018. NAV TR +14.5% versus benchmark TR +16.8%. Share price TR +13.0%.

Forthcoming

Capital structure

Fund details

AGM

September 2019

Ongoing charges

0.97% (January 2019)

Group

Invesco Asset Management

Interim results

June 2019

Net gearing

2.9%

Manager

Ian Hargreaves

Year end

30 April

Annual mgmt fee

Tiered (see page 7)

Address

125 London Wall
London EC2Y 5AS

Dividend paid

January, August

Performance fee

None

Launch date

July 1995

Trust life

Indefinite

Phone

+44 (0)20 3753 1000

Continuation vote

Three-yearly, next in 2019

Loan facilities

£20m multi-currency

Website

www.invesco.co.uk

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

An interim dividend was introduced in FY19, payable in January. Previously, dividends were paid annually in August.

Renewed annually, the trust has authority to purchase up to 14.99% and allot up to 5% of issued share capital. Repurchases include tender offers.

Shareholder base (as at 1 March 2019)

Portfolio exposure by sector (as at 31 January 2019, ex-cash)

Top 10 holdings (as at 31 January 2019)

Portfolio weight %

Company

Country

Sector

31 January 2019

31 January 2018*

Samsung Electronics

South Korea

Technology hardware & equipment

6.2

5.8

Tencent

Hong Kong

Software & services

4.1

3.0

HDFC Bank

India

Banks

3.7

3.5

TSMC

Taiwan

Semiconductors & semiconductor equipment

3.6

3.6

ICBC

China

Banks

3.5

2.9

AIA

Hong Kong

Insurance

3.2

3.4

Baidu (ADR)

China

Software & services

2.8

3.5

MediaTek

Taiwan

Semiconductors & semiconductor equipment

2.7

N/A

Hyundai Motor (preference shares)

South Korea

Automobiles

2.7

2.9

ICICI Bank

India

Banks

2.7

2.9

Top 10

35.2

35.2

Source: Invesco Asia Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in end-January 2018 top 10.

Market outlook: Influenced by geopolitical factors

Investor sentiment towards Asian equities turned more cautious in early 2018, as central banks started to reverse quantitative easing, signalling less favourable liquidity conditions and higher interest rates. Geopolitical developments also amplified risks for equity markets. These include an ongoing US-China trade dispute and political impasse in the US, which led to a government shutdown. The trade dispute has taken a toll on global economic growth, most notably in China where growth was already moderating in response to the government’s de-leveraging policy. Prospects for slowing growth in the US are also exacerbated by the waning effects of its 2018 tax cuts.

Since the beginning of 2019, however, there has been a reversal of several headwinds: the US Federal Reserve signalled that interest rate rises are on hold for the time being; the Chinese government announced policies to stimulate the economy; and the US and China governments appear to be trying to avert a further escalation of tariffs. In response, as shown in Exhibit 2 (LHS), Asian equities have rebounded and the MSCI AC Asia ex-Japan index is up c 10% year-to-date (compared with the 14.4% decline in 2018). Earnings growth expectations have been revised down to less ambitious single-digit levels resulting in the region’s P/E ratio at around its 10-year average, but still at a 9% discount to global equities. However, the medium-term economic GDP growth outlook for Asia ex-Japan is superior to that for the global economy. The IMF forecasts compound annual growth over 2018–2023 of 5.7% for Asia ex-Japan, which compares very favourably to 3.6% forecast for the world and 1.8% for advanced economies. However, the direction of Asian equities over the near term is likely to continue to be influenced by geopolitical developments.

Exhibit 2: Market performance and valuation

Performance of indices (last five years, all in £)

DS Asia ex-Japan vs DS World valuation comparison

Source: Refinitiv, Edison Investment Research. Note: Valuation data as at 18 March 2019.

Fund profile: Disciplined Asian equity specialist

IAT was launched in 1995 and its objective is to provide long-term capital growth by investing in a diversified portfolio of companies based in Asia. The trust changed its benchmark from the MSCI Asia Pacific ex-Japan index to the MSCI AC Asia ex-Japan index in May 2105 to better reflect its primary focus on Asia and habitual low exposure to Australasia. Fund manager Ian Hargreaves follows a bottom-up investment approach with particular emphasis on valuation discipline, strong company balance sheets and a long-term investment horizon of three to five years or more. Although capital growth is the trust’s primary objective, the portfolio has a good underlying yield of c 3%, which supports its ability to pay dividends. The board recently introduced an interim dividend (2.8p per share for the six months to end-October 2018), which it expects to represent around half of the full-year distribution.

The fund manager: Ian Hargreaves

The manager’s view: Asia relatively attractive

Hargreaves believes Asian equities are no longer cheap, having rebounded since the beginning of the year from depressed levels in late 2018. He notes that global growth is slowing and this will have an impact on Asia, which is sensitive to exports and global demand. The manager believes the ongoing US-China trade dispute is reflected in equity values; however, there is scope for positive surprise if a resolution is reached and if recently imposed tariffs can be removed. Downward earnings revisions are welcome, to bring investors’ expectations to more realistic levels, and Hargreaves would turn more confident on the prospects for Asian equities with signs of this trend bottoming. Meanwhile, although the region looks fairly valued relative to its own history, the manager thinks it is attractively valued compared to most other major equity markets. This is particularly the case when considering the relative health of Asia’s corporates. Hargreaves has observed that, since the global financial crisis, Asian companies in general are more conservatively managed; capital expenditure to sales has been falling and free cash flow generation has improved. These trends underpin scope for improving dividend growth in the region over the medium term.

Asset allocation

Investment process: Fundamental, focused on valuation

Hargreaves, supported by a team of six fund managers and analysts, follows a fundamental investment approach, unconstrained by benchmark considerations. The universe of listed companies in Asia comprises over 10,000 companies. By applying a proprietary screen, which filters by size, liquidity and environmental, social and governance factors, the investible universe is whittled down to around 1,000 companies. Visiting businesses and performing rigorous bottom-up analysis are important elements of the investment process and particular attention is paid to valuation. Hargreaves looks to buy companies trading at a significant discount to the team’s estimate of fair value and he is comfortable being contrarian, investing in stocks that are unloved by the market. The team targets double-digit annualised total returns for each stock that it invests in and maintains a company shortlist of around 100 stocks, ranked by estimated annual total return over the next three years. Stock selection is the primary driver for portfolio construction and the relatively concentrated portfolio of 50–70 stocks represents the manager’s highest-conviction investment ideas. However, top-down macroeconomic analysis and the need to ensure diversification also influence country and sector weights.

Current portfolio positioning

Exhibits 3 and 4 show IAT’s end-January 2019 exposures by sector and geography respectively. There is a higher weighting in financials compared to 12 months ago (4.6pp). In China, the manager purchased life insurer China Pacific, where he believes the quality of the business is improving, shifting from lower-margin savings products to higher margin and longer duration products, such as critical illness. Hargreaves believes this trend should continue, reflecting an increasing awareness of the low provision of state social security. Furthermore, he thinks the shares at purchases were attractively valued, trading at around half the embedded value of the company with little ascribed to its ability to grow new business. In India, the manager added to ICICI Bank as he gained confidence in new management and in the country’s improving credit quality cycle, where bad loans had impeded profitability over the past several years. The financials exposure was also increased in Thailand through the purchase of Kasikornbank and additions to the holding in Bangkok Bank. Hargreaves views Thailand’s credit cycle favourably. Household debt has been falling from unsustainably high levels over the past few years and the economy’s cyclical recovery is continuing, having been interrupted by unusually depressed activity during the 12-month mourning period for the late King Bhumibol, which ended in Q417.

Exhibit 3 shows a 9.4pp increase in communications services and a 10pp reduction in information technology over the year to end-January 2019. However, this largely reflects MSCI’s industry sector changes in September 2018, which expanded the previously named telecommunications sector to communications services and now includes some stocks that were previously classified as information technology companies. These large shifts in the portfolio mainly reflect reclassifications for China internet stocks Tencent, NetEase and Baidu, which are now in the communications services sector.

Shifts in country weights over the past year were relatively modest. South Korea was reduced by 3.2pp, partly reflecting relative performance, but also the sale of Hyundai Home Shopping, which disappointed investors with poor capital allocation decisions, ultimately leading to the manager’s loss of confidence in the company’s management.

Exhibit 3: Portfolio sector exposure vs benchmark (% unless stated)

Portfolio end- January 2019

Portfolio end-January 2018

Change
(pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Financials

31.2

27.6

3.6

23.8

7.3

1.3

Information technology

19.3

29.3

(10.0)

16.7

2.6

1.2

Communications services

12.6

3.2

9.4

12.9

(0.3)

1.0

Consumer discretionary

10.9

11.4

(0.4)

12.8

(1.8)

0.9

Industrials

6.6

10.2

(3.6)

6.9

(0.3)

1.0

Materials

6.0

5.2

0.7

4.7

1.3

1.3

Energy

4.3

4.8

(0.6)

4.7

(0.4)

0.9

Real estate

3.2

3.5

(0.2)

6.5

(3.2)

0.5

Healthcare

2.5

1.3

1.2

2.9

(0.4)

0.9

Consumer staples

2.3

1.9

0.5

4.9

(2.6)

0.5

Utilities

1.1

1.7

(0.6)

3.3

(2.2)

0.3

Total

100.0

100.0

100.0

Source: Invesco Asia Trust, Edison Investment Research. Note: Rebased for cash/gearing.

Exhibit 4: Portfolio geographic exposure vs benchmark (% unless stated)

Portfolio end-January 2019

Portfolio end-January 2018

Change (pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

China

27.1

27.5

(0.4)

36.2

(9.1)

0.7

South Korea

16.5

19.7

(3.2)

16.3

0.2

1.0

Hong Kong

15.5

15.1

0.4

11.7

3.8

1.3

India

15.0

13.3

1.7

9.9

5.1

1.5

Taiwan

12.2

12.2

(0.0)

12.4

(0.2)

1.0

Japan

2.8

3.3

(0.5)

0.0

2.8

N/A

Singapore

2.5

2.1

0.4

4.0

(1.5)

0.6

Thailand

2.5

1.4

1.1

2.9

(0.3)

0.9

Australia

1.7

2.1

(0.4)

0.0

1.7

N/A

Indonesia

1.6

1.1

0.5

2.7

(1.1)

0.6

Malaysia

1.4

1.0

0.4

2.7

(1.2)

0.5

Philippines

1.2

1.2

0.0

1.3

(0.1)

0.9

Pakistan

0.0

0.0

0.0

0.0

(0.0)

0.0

Total

100.0

100.0

100.0

Source: Invesco Asia Trust, Edison Investment Research. Note: Rebased for cash/gearing.

Performance: Solid long-term track record

As shown in Exhibit 6, IAT’s share price and NAV total returns performance have outperformed the benchmark over three, five and 10 years, while the outperformance against the FTSE All Share index is particularly meaningful over these periods. Over shorter periods, the NAV total return has been broadly in line with the index; however, the manager focuses on long-term capital gains over a three- to five-year horizon and is not influenced by shorter-term performance considerations.

Exhibit 5: Investment trust performance to 28 February 2019

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised. Benchmark is MSCI AC Asia Pacific ex-Japan until 30 April 2015 and MSCI AC Asia ex-Japan thereafter.

Exhibit 6: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to benchmark

(0.8)

2.4

3.0

0.9

3.5

16.7

24.9

NAV relative to benchmark

(0.4)

0.6

0.1

(0.1)

4.0

15.9

23.6

Price relative to FTSE All Share

(2.1)

2.1

3.2

(5.4)

28.4

51.5

53.8

NAV relative to FTSE All Share

(1.7)

0.4

0.3

(6.4)

29.1

50.5

52.2

Source: Refinitiv, Edison Investment Research. Note: Data to end-February 2019. Geometric calculation.

Exhibit 7: NAV total return performance relative to benchmark over three years

Source: Refinitiv, Edison Investment Research

Discount: Proactive board aiming to narrow discount

IAT trades at a 4.8% discount to ex-income NAV, which is below the three-year average of 10.6%. The board considers, on average, a discount of less than 10%, in normal market conditions is desirable. Renewed annually, it has the ability to repurchase up to 14.99% of share capital; however, share buybacks will only be undertaken when the board considers them to be effective, taking into account market factors and the discounts of comparable funds. Under the new chairman, Neil Rogan, the board has adopted several measures aimed to help create additional demand for IAT’s shares and reduce the discount. These include the payment of an interim dividend, the introduction of a tiered fee structure, which would reduce the management fee for assets over £250m (see page 7), and increased engagement with individual investors including greater access to Hargreaves and the trust’s directors.

Exhibit 8: Share price discount to NAV (excluding income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

IAT is a conventional investment trust with one class of share. During FY18, the board conducted a tender offer for 15% of ordinary shares, which resulted in the repurchase and cancellation of 12.5m shares at a cost of £39.5m. Smaller discretionary repurchases have taken place during FY19 (0.5m shares at a cost of £1.2m) leaving 70.5m ordinary shares in issue and 4.5m held in treasury. The trust is subject to a three-yearly continuation vote and the next is due at the September 2019 AGM.

Gearing is permitted up to 25% of net assets and IAT has a £20m multi-currency revolving credit facility with The Bank of New York Mellon. As at 31 January 2019, the trust had net gearing of 2.9%. The board has recently agreed a tiered fee structure with Invesco Fund managers. It will continue to pay an annual management fee of 0.75% of NAV for assets up to £250m, with a reduced fee of 0.65% pa on assets over £250m. The fee is split 25:75 between the revenue and capital accounts. As at end-January 2019, the ongoing charge was 0.97% (0.99% as at end-FY18).

Dividend policy and record

IAT’s primary objective is to deliver long-term capital growth; however, the trust has also increased the annual dividend in seven of the past 10 years, with unchanged payments in the other three. The board aims to increase the dividend each year, using revenue reserves and, if necessary, capital reserves to smooth dividend payments in years when they are not fully covered by revenue. It recently announced the introduction of an interim dividend (2.8p for the six months to end-October 2018) and expects this to represent around half of the full-year dividend. This would suggest a prospective yield of 1.9% (in FY18, IAT paid an annual dividend of 5.5p per share).

Peer group comparison

IAT is a member of the AIC Asia Pacific ex-Japan sector and Exhibit 9 shows a selected peer group of 12 funds (excluding those with income focused mandates and a smaller trust with a shorter performance track record). The trust’s NAV total return is above average over three, five and 10 years, ranking fifth, fourth and sixth respectively, while trailing the mean over one year. IAT is one of the smaller funds (ranking 10th) and its ongoing charge, ranking seventh, is in line with the peer average; however, it does not charge a performance fee. The dividend yield ranks fourth, reflecting the trust’s good underlying income from portfolio holdings. IAT’s discount to NAV is narrower than average, ranking seventh out of 12.

Exhibit 9: Selected peer group as at 18 March 2019*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (ex-par)

Ongoing charge

Perf.
fee

Net
gearing

Dividend yield (%)

Invesco Asia Trust

205.8

(2.9)

60.6

96.7

324.5

(6.8)

1.0

No

103

1.9

Aberdeen Standard Asia Focus

359.0

(0.3)

37.9

47.7

431.8

(12.9)

1.2

No

110

1.3

Aberdeen New Dawn

262.1

(2.7)

60.1

61.8

291.6

(12.4)

0.8

No

110

1.8

Edinburgh Dragon

487.7

(1.8)

56.1

67.4

264.6

(11.6)

0.8

No

104

1.1

Fidelity Asian Values

300.6

3.2

48.8

90.9

332.6

2.3

1.2

No

100

1.3

JPMorgan Asian

337.8

(1.5)

77.5

100.8

236.7

(8.4)

0.7

No

100

4.5

Martin Currie Asia Unconstrained

135.3

(1.8)

48.2

60.7

153.8

(12.5)

1.1

No

101

4.4

Pacific Assets

343.8

8.2

49.4

90.7

328.5

(0.5)

1.3

No

100

0.9

Pacific Horizon

195.7

(13.5)

69.4

79.2

269.4

2.7

1.0

No

105

0.2

Schroder Asia Pacific

733.5

(6.9)

65.7

98.5

369.1

(9.4)

0.9

No

100

2.2

Schroder Asian TR Inv. Company

321.6

(4.3)

61.7

101.1

287.1

0.4

1.0

Yes

103

1.4

Scottish Oriental Smaller Cos

295.5

(1.0)

33.5

50.5

423.0

(12.4)

1.0

Yes

100

1.2

Average

331.5

(2.1)

55.7

78.8

309.4

(6.8)

1.0

103

1.8

Trust rank in sector (12 funds)

10

9

5

4

6

5

7

5

4

Source: Morningstar, Edison Investment Research. Note: *Performance data to 15 March 2019. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

The board

IAT’s board consists of four independent non-executive directors. Chairman Neil Rogan was appointed in September 2017 (following Carol Ferguson’s retirement in July 2018 after nine years of service). In alignment with the new Financial Reporting Council UK Corporate Governance Code, the trust appointed its first senior independent director, Owen Jonathan (who joined the board in March 2013), while the chairman has stepped down from the audit and remuneration committees. He will also serve a maximum term of nine years, ending no later than the AGM in 2026. The other directors are Tom Maier (appointed in March 2009) and Fleur Meijs (appointed in December 2016).


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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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This report has been commissioned by Invesco Asia Trust and prepared and issued by Edison, in consideration of a fee payable by Invesco Asia Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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