Risk-on appetite returned to markets following the US presidential election result and encouraging news on a Covid-19 vaccine, which augurs well for equities across Asia, the vast geographic region which remains well positioned as the powerhouse of global growth.

Flush with regional bargains is investment trust Aberdeen Standard Asia Focus (AAS), trading on a 15.2% discount to net asset value which suggests significant re-rating potential if performance picks up.

This investment trust aims to maximise shareholders’ total return over the long haul by investing in a high-conviction portfolio of exciting and well-researched Asian smaller companies in the economies of Asia and Australasia, excluding Japan.

Seasoned Asian equities expert Hugh Young co-manages the investment trust alongside Gabriel Sacks. Using their on-the-ground advantage, they scour the market for high-quality small cap gems valued at US$1.5 billion or below.

Their focus is on finding market leaders with sustainable earnings growth and resilient balance sheets that are hitched to Asia’s dynamic growth themes including greater demand for healthcare, technological advancements, and online shopping.

A portfolio overhaul initiated by Young at the board’s request drove outperformance in 2018 and 2019, although net asset value fell 13.6% in the year to July 2020, underperforming the 2.5% decline of the MSCI Asia Pacific ex-Japan Small Cap Index.

During this tough period, small caps were largely out of favour as the market focused on large caps, China and technology, while the net asset value decline was exacerbated by the portfolio’s structural gearing and relatively lighter exposure to China and Korea, nations which handled the pandemic better than peers and had greater flexibility to boost spending to support their citizens.

Shares believes there is potential for a significant uptick in performance at Aberdeen Standard Asia Focus, a diversified portfolio invested in such companies as Singapore-listed testing group AEM and Taiwan’s largest online retailer MoMo.com.

Investors are also buying exposure to Singapore’s Raffles Medical, an expansionist hospital and clinic provider, and Sri Lanka’s largest conglomerate John Keells.

Dividend growth has been strong in recent years; last year’s final dividend was increased by 3.6% to 14.5p and the trust also declared a special dividend of 4.5p and sits on significant revenue reserves. One bear point worth noting is the ongoing charges figure of 1.09%, a touch above those of the two other trusts in the Asia Pacific Smaller Companies sector.

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