Abrdn’s Asia veteran Hugh Young is stepping down from his last fund management role at Abrdn Asia Focus (AAS ) as he prepares to end his 43-year investment career.

Singapore-based Young, who has run the £498m smaller companies investment trust since launch in 1995, is retiring at the end of the year from Abrdn (ABDN), where he has worked since 1985.

The group said Young had decided to retire as chair of its Asia Pacific business, which he founded in 1992. This was an advisory role he took on in January 2021 after Rene Buehlmann replaced him as head of the Apac division.

The fund manager, who stepped off his open-ended Asia and emerging market funds five years ago, was previously a main board director and head of investments at Aberdeen Asset Management before its merger with Standard Life in 2017.

His other last remaining directorships are on the board of the India Fund in the US that Abrdn manages and Abrdn New Dawn (ABD ) investment trust, which is merging with stablemate Asia Dragon (DGN ). 

‘Hugh has been instrumental in establishing a solid foundation for Abrdn’s Asia Pacific business, building a deep bench of talent and delivering quality investment outcomes, putting the region on a sustainable growth path. We want to sincerely thank him for his enormous contribution to the business over the 38 years,’ a group spokesperson said.

Young leaves Abrdn Asia Focus in the hands of Flavia Cheong, Abrdn’s head of Asia Pacific equities, who has co-managed the portfolio since 2021 along with Gabriel Sacks, who has worked with Young for 15 years.

Xin-Yao Ng, an Asian equities investment manager in Singapore who has worked with Young for five years, has also been appointed a co-manager. 

Numis Securities analysts Ash Nandi and Gavin Trodd said there was ‘an element of key man risk’ for the portfolio but noted that succession planning has ‘been in the pipeline for a while’. They added that given the co-managers have worked with Young for a significant spell, there should be a ‘smooth transition’.

Chair of the trust Krishna Shanmuganathan said Young (pictured below) had ‘worked tirelessly’ on behalf of the company since its launch and wished him the best for his ‘well-earned retirement’.

Young, who has been open about his mistakes as a manager, has delivered total underlying returns of 2,284% on the trust, or 12% per year, compared with 4.7% per year, or a total return of 261.3%, for the MSCI AC Asia ex Japan Small Cap index in sterling terms, according to Numis.

Shanmuganathan said this was a ‘testament to Hugh’s skill, dedication and methodology’, all of which has been ‘handed down’ to the management team over the years.

Young’s departure comes amid an exodus of senior fund managers from the group. Bruce Stout, manager of Murray International (MYI ), announced an end to his 20-year tenure in August, and UK small-cap veteran Harry Nimmo retired at the end of last year. 

China shift

Young’s last financial year with Asia Focus saw the trust underperform, delivering 7.6% in net asset value (NAV) total returns for the 12 months to the end of July, while the company’s benchmark was up 8%.

Young’s team used a shift in the investment policy, which removed the limit of a company size at initiation, to pick up larger companies in China, which accounted for nearly 10% of assets at 31 July, up from 7.7% last year and 3.1% in 2021.

Key purchases in the country were online car insurer Autohome and seed and nut producer ChaCHa Foods, which make up 2.1% and 1.4% of the portfolio respectively.

Despite the managers’ bullish views on the country, China dragged on performance, with key detractors including drug testing business Joinn Laboratories and materials company Sinoma Science & Technology.

The managers said there are ‘still good opportunities’ to invest in small caps in China and noted the Chinese government has begun a round of monetary easing that ‘should increase support to the company at the margin’.

Hong Kong-listed banking group Dah Sing and Singaporean investment holding company Yoma also hit performance.

However, stock picks in India and Indonesia proved positive, with key contributors including Indian tech solutions company Cyient, which saw a strong earnings recovery following demand in the aerospace industry, and property developer Prestige Estates, which rose after taking advantage of industry consolidation.

Since the July year-end, Abrdn Asia Focus’s NAV has slipped 2.2% compared with a 0.3% rise in the index, with the shares trading 17% below NAV.

‘Overall, we have been nimble, taking the opportunity to raise the portfolio’s earnings visibility and reduce exposure to names where this visibility is less certain,’ the managers said in their report. ‘As a result, we continue to favour quality Asian small-cap companies with solid balance sheets and sustainable earnings prospects that can emerge stronger and position the portfolio well in tough times’.

Last November, the board announced a series of measures to curb its share price discount. It doubled its dividend, cut charges, introduced a performance-related tender offer and split its shares. 

The company paid a total dividend of 6.41p per share in the financial year, up from 6.4p in 2022. It has also declared a special dividend of 2.25p per share, bringing total distribution for the year to 8.66p, up from 8p in the previous year. 

The board purchased 500,000 shares in the financial year as part of its buyback scheme to narrow the discount.