The agility advantage: How ISA investors can access Asia’s long‑term growth potential

Shenzhen’s glistening mega‑malls. The bustling financial districts of Mumbai. Cutting-edge chemicals plants in Seoul. Grocery chains in Ho Chi Minh City.

These kinds of places are the engines of Asia’s growth story. They are alive with creativity, ambition and entrepreneurial energy. But they are also corners of the region that British investors frequently overlook.

Away from the headlines, thousands of smaller, domestically focused businesses in Asia are increasing their market share in important economic niches and quietly compounding their earnings year after year.

This is the world Scottish Oriental invests in. Over the last three decades, our Asia-based investment team has sought out smaller companies that can respond nimbly to change and create durable businesses in dynamic economies. These firms have the potential to outpace their bigger rivals – and become the giants of tomorrow.

Why Asia’s smaller companies?

At Scottish Oriental, we like smaller companies for a few key reasons.

One is based on simple arithmetic. All else being equal, a company turning over US$500m may find it easier to double its revenues than one earning US$10bn. This is because it is starting from a lower base, which means even modest gains in customers can translate into significant revenue growth. The larger company would need to find much bigger opportunities in order to have the same percentage impact on its earnings.

Then there is the agility advantage. When consumer tastes shift or new technologies emerge, smaller businesses can reallocate resources and enter adjacent markets with a speed that would be impossible for a multinational conglomerate.

This matters, because Asia continues to change at a rapid pace. Consumers in China, India and Southeast Asia are becoming more affluent and spending more on everything from retail goods and travel to healthcare and education. Uptake of artificial intelligence (AI) is beginning to reshape the corporate landscape.

In this shifting environment, the key is to find companies with both growth potential and the fundamental strengths to stay resilient in the face of unexpected challenges. Such firms often go under the radar. To find them, you need to dig deep. On-the-ground research and due diligence are crucial.

How we invest

Because Scottish Oriental’s investment team is based in Asia, we can spend most of our time meeting companies in person, rather than at our desks reviewing spreadsheets. We undertake more than 1,000 company meetings each year. This helps us identify new ideas and spot risks.

We are “bottom-up” investors, which means we don’t invest based on big-picture economic forecasts, but instead focus on finding the best companies, regardless of market or sector. We prefer those with strong balance sheets, market-leading business models and skilled management teams, whose interests align with those of minority shareholders.

Recent investments include Mobile World Group (MWG), a Vietnamese company that started as an electronics retailer before expanding into other areas, such as fresh grocery. We like MWG’s customer-focused culture and the management team’s disciplined approach to growing the business.

Another example is Chinese hotel brand Atour Lifestyle. We were impressed by the company’s commitment to innovation: for example, it has drawn on guest feedback to design a range of high-end bedding that can be tried in its hotels then purchased on its app. We believe Atour is well placed to benefit from increasing demand for better travel experiences and premium products in China.

Three decades of investing in Asia

Our investment process has stayed consistent since the launch of Scottish Oriental in 1995. Over the last 30 years, we have seen the dramatic rise of China and India, as well as periods of turbulence such as the Asian Financial Crisis.

We are now seeing a new disruptive force in the form of advanced technology. The frenzy for AI-linked companies, such as big chipmakers, has driven Asian markets higher.

Because we focus on quality and are cautious of speculative areas, our performance tends to lag when broader markets are rising strongly – the AI-fuelled rally in 2025 was a case in point. On the other hand, we usually do better when sentiment turns, due to our diversified holdings and our preference for companies with robust balance sheets.

Scottish Oriental’s returns since inception are an indication of this resilience (although it’s important to remember past performance is not a guide to the future). As of January 31, 2026, the Trust’s net asset value (NAV) per share¹ had risen 2,051% since itsfounding in 1995, compared with a rise of 403% for the MSCI Asia (ex Japan) Small Cap Index.²

Why an ISA – and why now?

Independent recognition highlights why Scottish Oriental could be a compelling option for ISA investors looking to grow their capital over the longer term.

In a 2026 report, the Association of Investment Companies (AIC) ranked Scottish Oriental as one of their “ISA millionaire” investment trusts.³ The findings showed an investor who allocated their full ISA allowance to the Trust annually between 1999 and 2025 (a total of £346,560), and reinvested the dividends, would have accumulated a total ISA value of £1,652,465 as of January 31, 2026.

In addition, it’s also worth considering the advantages of the investment trust structure. Unlike some other investment vehicles, trusts have an independent board of governors to provide transparency and accountability. And, because the shares are listed, they may trade at a discount to the value of the assets held in the portfolio. Scottish Oriental’s shares were priced at a 9% discount to NAV as of end-January 2025.

Asia’s growth story

All of which means it could be a good time to start investing in the Asian smaller companies universe.

Across the region, growing use of digital services and the expansion of the middle class are influencing consumer and corporate behaviour. We expect this will continue to create long‑term demand in sectors such as financial services, travel and consumer goods, all areas where well‑managed smaller companies can take meaningful share.

By focusing on high-quality businesses with scope to expand, Scottish Oriental aims to identify the champions of the future – and help investors participate in Asia’s long-term growth story.