Schroder Oriental Income: a 2026 bestseller

One of the best-selling investment trusts in the first quarter of the year on the Fidelity platform was Schroder Oriental Income, which holds a portfolio of dividend-paying stocks in the Asia ex Japan region. The area is home to many world-leading businesses that are returning cash to shareholders and these offer an attractive way for UK-based investors to diversify their income streams.¹

• Read: What is an investment trust? The basics

Manager Richard Sennitt focuses on quality companies with good dividend growth prospects and is confident in the portfolio’s income generating potential. Since its launch in July 2005, the trust has increased its distributions every year², earning a place among the Association of Investment Companies’ next generation of dividend heroes.

Sennitt is an Asia expert with extensive relevant experience and is backed up by a large group of company analysts, many of whom are based in the region.³ This depth of resources has helped the trust to secure a place on Fidelity’s Select 50 list of handpicked funds.

• Get updates on markets, ISA funds, pension saving and much more

Objective and approach

Schroder Oriental Income aims to provide a total return by investing in companies that are either based in, or derive a significant proportion of their revenues from, the Asia Pacific region and that offer attractive yields.⁴ It may appeal to those looking for a combination of growth and income who are comfortable with the higher level of risk.⁵

Asia offers some promising opportunities for income-seekers, with many companies paying good dividends while still keeping enough profits to reinvest in their businesses. Improvements in corporate governance are also encouraging more stocks to focus on shareholder returns, which should support both current and future dividend growth.⁶

Income discipline is a key part of the trust’s investment approach. Focusing on companies that are able to reward their shareholders with dividends means prioritising balance sheet sustainability and good governance; qualities that should stand investors in good stead over time.⁷

• Looking for personalised financial advice? Our advisory service can help you plan for your next step

How does the manager see it?

Speaking in a recent interview, Sennitt said that they aim to buy into companies that have got an income rationale to own them, but that have also got potential upside to their fair value as well.⁸

“Because of that income rationale, I think what you see relatively consistently through time is that the overall blend of the portfolio will end up with a value tilt rather than a growth one.”⁹

The underlying portfolio

At the end of April, the portfolio contained 56 holdings with the 10 largest positions accounting for half of the assets. The biggest of these were Taiwan Semiconductor Manufacturing Company and Samsung Electronics, with a combined allocation of 25%. Both have benefitted significantly from the huge investment in AI and offer modest dividend yields.¹⁰

The two main sector weightings were Information Technology and Financials, which represented 37.81% and 23.69% of the fund respectively. There was also a significant geographic tilt in favour of particular areas, with the key countries being Taiwan, Australia, China and South Korea.¹¹

Reliable and growing source of income

For the financial year ending August 2025, the trust declared total dividends of 12.2p per share, representing a 1.7% increase on the previous period.¹² Based on the current price of 424p, the trust has an historic yield of 2.9%, although the income is not guaranteed.

Schroder Oriental Income has increased its dividends every year since launch, but in 2025 it had to draw on the revenue reserves as the distribution slightly exceeded earnings per share. However, the remaining reserves are substantial and are equivalent to almost a whole year’s payout.¹³

The trust pays quarterly dividends, with three equal interim amounts and a final balancing payment in December. These distributions have recently been smoothed to improve the profile for income investors.¹⁴

Performance

In the half-year accounts to the end of February, the fund generated an NAV total return of 35.3%, outpacing the 30.7% achieved by the MSCI AC Pacific ex-Japan Index. Performance was mainly driven by stock selection, particularly in technology, resources and selected financials. 

The longer term numbers are also impressive. Over the 10 years to the end of April, the trust produced an annualised share price total return of 12.2%, compared to 10.9% from the benchmark, both measured in sterling.¹⁵ 

As might be expected from an Asia Pacific mandate, the discrete annual returns have been pretty volatile. During the past decade there have been years in which gains have exceeded 30%, 40% and even 60%, as well as two years of modest declines.¹⁶         

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Select 50 is not a personal recommendation to buy or sell a fund. This fund invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Before investing, please read the relevant key information document which contains important information about the fund. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.