Three reasons to consider Schroder Oriental Income for your portfolio

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Holding a lot of cash, with changes to cash ISAs on the way? If you want a reliable income without giving up on growth, Asian shares could be worth a look. Here are three reasons the Schroder Oriental Income Fund (SOI) may deserve a place in a diversified portfolio. It's an Investment Trust that has raised its dividend every year since it launched in 2005.

Changes to cash ISAs are on the horizon, so many investors holding large cash balances may be wondering whether to put some of that money to work. For those looking to generate reliable income while maintaining exposure to growth, Asian equities may appeal. The Schroder Oriental Income Fund (SOI) takes a disciplined approach to this opportunity, investing in quality companies with attractive dividendA payment made by a company to its shareholders, typically representing a distribution of the company's profits. prospects and potential for capital growth across Asia. Here we outline three reasons why the trust may merit consideration.

1. Asia’s dividend opportunity

Asian equities are increasingly recognised as an attractive source of dividend income. YieldsThe return or profit on an investment, usually expressed as a percentage of the total price per year. For example, if the yield on a bond was 5%, this means an investor with £100 in that bond would get £5 in returns per year. across the region are generally higher than those available in markets such as the US. Meanwhile, payout ratios are relatively low, leaving many companies with capacity to increase distributions over time, supported by strong cashflows and conservative balance sheets.

Corporate behaviour has also evolved. Governance standards have improved across much of the region, with more companies adopting explicit dividend policies and placing greater emphasis on shareholder returns. For UK investors, Asian income can also offer useful diversificationThe process of spreading your investment portfolio across different asset classes, such as partially in shares and partially in bonds, in order to reduce risk. away from domestic dividends that stem from a relatively narrow set of large companies.

2. A disciplined approach to Asian income

SOI is designed to capture the region’s dividend opportunity through a disciplined investment approach. Portfolio manager Richard Sennitt focuses on quality companies with attractive dividend prospects and potential for capital growth. By prioritising such businesses, the trust aims to deliver a natural income stream, alongside the potential for dividend growth over time.

This approach is supported by Schroders’ extensive Asian capabilities, with analysts based throughout the region providing detailed insights into companies and industry dynamics.

The trust has increased its dividend every year since launch in 2005 and is expected, subject to market conditions, to become the first Asian investment trust to achieve ‘Dividend Hero’ status from the Association of Investment Companies (AIC) – a milestone reflecting the consistency of its income strategy.

3. A supportive backdrop for Asia

Asian markets have delivered strong returns over the last 18 months, albeit with some sharp swings along the way. Even so, equity markets across the region generally trade on more moderate valuations than markets such as the US and provide access to a broad range of quality companies with attractive and growing dividend streams.

From here, we believe the case for the region remains robust, with returns increasingly driven by earnings delivery. Asian markets have historically rewarded active management, reflecting the region’s diverse opportunity set, and disciplined active strategies like SOI should be well placed to thrive.

SOI may suit investors seeking a combination of income and long-term growth from Asian equities as part of a diversified portfolio. For the latest information on portfolio positioning, performance and risks, please see the most recent Schroder Oriental Income Fund updates on the Schroders website.

Discrete yearly performance

Source: Morningstar, net income reinvested, net of ongoing charges and portfolio costs and where applicable, performance fees (GBP).

Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.

Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.