The managers of the Aberdeen Asia Focus investment trust have locked in some of the gains of the AI trade to put a more defensive tilt to its smaller companies-focused portfolio.
In the trust’s half-year report, managers Gabriel Sacks and Xin-Yao Ng pointed out that the best-performing Asian markets have been those most aligned with the AI theme, such as Taiwan and South Korea. Markets with limited AI exposures tended to underperform. They singled out India, which had added headwinds like US tariffs, rupee weakness and an earnings slowdown.
The trust made a net asset value total return of 11.4% in the six months to 31 January 2026 and a share price total return of 13%.
Sacks and Ng attributed some of the trust’s strong recent performance to the AI rally: “The portfolio outperformed its benchmark by 100 basis points over the review period as the AI thematic that drove market returns also led to some strong moves across your holdings in the IT hardware supply chain and industrials sector.”
Taiwan is one of the £522.7m trust’s largest geographic exposures, thanks to the country’s high‑quality smaller companies leading niche segments across semiconductors, electronics and industrial spaces.
Some of Aberdeen Asia Focus’ best performers are based there. The managers highlight Chroma ATE, a provider of specialist testing equipment for advanced electronic and semiconductor components, and Taiwan Union Technology, a maker of copper-clad laminate used in printed circuit boards, as key contributors in the period under consideration.
“These businesses are benefiting from AI-related demand and a unique industry position that is translating into solid earnings and cashflow,” they explained.
Other strong performers linked to the AI trade include Leeno Industrial, which makes spring test pins and integrated chip test sockets, Hansol Chemical, a supplier of key materials for semiconductors and advanced manufacturing, and industrial group Hyundai Electric, a manufacturer of transformers, motors and smart grid systems. All are Korean holdings.
Precision Tsugami is also benefiting from China’s shift towards higher-value manufacturing across electric vehicles, AI hardware and robotics. All of these demand high-precision machinery and Precision Tsugami sells high-end computer numerical control (CNC) machine tools.
However, despite the strong performance of AI winners in recent months, Aberdeen Asia Focus has been taking profit from this part of the market and turning “slightly more defensive”.
“While we are still positive on Asian technology stocks as we move into 2026, particularly in the hardware space given their role as an enabler of all AI applications, we have taken significant profits and are looking at other areas where we see clearer upside,” the managers told investors.
Among the “inexpensive names” in south-east Asia that the trust has added to its portfolio are Thai Life Insurance, one of Thailand's leading life insurers, and Chifeng Jilong Gold Mining, a quality Chinese gold producer.
It also added “attractive growth opportunities” in the form of Hong Kong-listed WuXi XDC and ASMPT. WuXi XDC helps biotech and pharmaceutical companies make complex advanced drug treatments, while ASMPT manufactures machines and tools used in semiconductor and electronics assembly industries.
On Aberdeen Asia Focus’ recent portfolio tweaks, chair Krishna Shanmuganathan said: “Given the more volatile market environment, your manager adopted a more defensive stance, reducing gearing and adding selective exposure in south-east Asia, where valuations looked more compelling.
“Throughout the period, the manager remained disciplined in taking profits from winners. While this approach carried the risk of being too early in realising gains, your board believes this is prudent risk management, especially given the sharp run-up in share prices across parts of the technology sector.”