THE chairman of the £154 million Martin Currie Asia Unconstrained investment trust has hailed the vehicle’s return to form despite it narrowly underperforming its benchmark in the year to the end of March.

Having shrunk by 7.9 per cent in the previous 12 months, the trust’s net asset value per share made a total return of 33.5 per cent in the most recent year.

Although this was 1.5 percentage points lower than the 35 per cent produced by the MSCI Asia ex Japan Index, chairman Harry Wells noted it was the trust’s best annual return in five years.

“Index comparatives are not really pertinent in evaluating a long-term, value-driven, unconstrained approach,” he added.

Despite the reversal in fortunes, the trust’s discount stood at 14.6 per cent at the end of the year, leading the board to propose a new dividend policy as a means of bringing it down.

Mr Wells said that as share buybacks had not been successful in narrowing the discount, the intention now is to pay dividends from capital to attract retail investors with “an insatiable appetite for premium income streams”.

“The board has been continually frustrated by the discount hovering around 15 per cent for an extended period of time,” Mr Wells said.

“While we have not been buying back shares since June 2016, we were active when the market was depressed in the second half of 2015 with little effect on the discount. The board has concluded that buying back shares merely facilitates sellers, further erodes liquidity and shrinks the size of the company.”

The trust will pay a final dividend of 13.68p, which will include 8.43p from capital. Last year’s final dividend was just 5.25p.