Asia-focused investment trust Pacific Horizon (LON:PHI) posted an outstanding NAV (net asset value) total return for the year to July 2026. A substantial amount of the excess return came from the managers’ bets on AI-related stocks and sectors.
An outstanding year
Over the year to end-July, the Baille Gifford-managed trust’s NAV total return was 65.1% against 35.8% for the MSCI Asia ex-Japan index. The share price return was also ahead of the index at 63.3% on a total return basis. However, the discount to NAV remained stubbornly high at around 10%.
Managers Roddy Snell and Ben Durrant described the 12-month period as ‘a strong but highly skewed year for Asian markets’. The majority of the excess return was driven by individual stock selection and at the sector level by Technology and Materials.
Pacific Horizon total return performance
| NAV (%) | Share price (%) | Index (%) | |
| 1 year | 65.1 | 63.3 | 35.8 |
| 3 years | 87.3 | 82.5 | 69.8 |
| 5 years | 54.3 | 34.1 | 57.2 |
| 10 years | 437 | 436 | 164 |
Source: Baillie Gifford
South Korea and Taiwan were the strongest performers, driven by their semiconductor industries and ‘exceptional’ AI-related demand, while China, India and Indonesia declined.
On an absolute basis, the trust’s strong performance reflected big returns from two of its biggest tech holdings, Samsung Electronics and TSMC. Samsung is a South Korean producer of chips and IT products, while TSMC is a Taiwanese ‘chip foundry’ firm.
The portfolio’s largest individual contributor was SK Square with a 551% rise in the share price. The company provides economic exposure to SK Hynix and benefited from the exceptional improvement in memory pricing and earnings. Samsung Electronics also rose 255%, benefiting from the same tightening supply conditions and accelerating AI-related demand.
In terms of relative return, China was the largest contributor with selected AI and technology companies performing particularly strongly. The trust’s substantial underweight position in India and its materials holdings also added meaningfully. Weakness was concentrated in consumer holdings, Indian property and Vietnam.
Maintaining a positive outlook
Portfolio activity reflected the changing opportunity set, with the managers materially reducing exposure to Vietnam and India. Proceeds were reinvested predominantly in North Asian semiconductors, selected Chinese technology companies and materials. China remained the largest country position, while South Korea and Taiwan together accounted for almost half of the portfolio.
The managers remain positive on the outlook for Asia and Asian stocks. ‘Strong earnings growth across AI infrastructure, rising investment in energy security and electrification, and attractive valuations continue to provide a broad opportunity set’, they add.
Investors should note that as with other trusts managed by Baillie Gifford, private companies make up part of Pacific Horizon’s portfolio. Investments are held at ‘fair value’, or the price which would be paid in an open-market transaction, which is adjusted regularly to reflect valuation cycles and ‘trigger’ events.
Top 10 holdings as of 31 July 2026
| Stock | Country | Industry | % of portfolio |
| TSMC | Taiwan | Chips | 14.6 |
| Samsung ELectronics | South Korea | Chips, phones, electronics | 13.0 |
| SK Square | South Korea | Asset manager | 6.1 |
| SK Hynix | South Korea | Chips | 4.2 |
| Tencent | China | Internet services | 4.0 |
| ByteDance | China | Social media | 3.9 |
| MediaTek | Taiwan | Electronics | 3.8 |
| MMG | China | Mining | 2.6 |
| Chifeng Jilong Gold | China | Gold mining | 2.5 |
| Montage Technology | China | Chip design | 2.4 |
Source: Baillie Gifford
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The last year marks a significant turnaround from FY25 when Pacific Horizon lagged the benchmark, returning 8.3% against 17.1%. The managers’ bet on AI demand pushing up chip stocks and related electronics producers paid off handsomely.
Last year, the trust introduced a five-year performance-related tender offer for up to 25% of the shares, conditional on it beating the index. It’s already off to a good start, with its NAV and share price up 80.2% and 81.2% since March 2025 against 53.2% for the index.
The trust also faces a continuation vote at its AGM, but after these results we can’t imagine many people voting against it. We’re just curious as to why the discount to NAV actually widened in the year to July instead of narrowing.
QuotedData’s senior analyst Richard WIlliams concurs, calling the widening ‘disappointing after a remarkable year and a powerful demonstration of what its high-conviction growth approach can deliver when markets move in its favour’.
