VOF: Fundamentals Suggest Promising Outlook
Edison | Dec 05, 2018 06:18AM ET
VinaCapital Vietnam Opportunity Fund (LON:VOF) is a large, well-established Vietnam specialist investment fund, differentiated by its focus on private deal sourcing. NAV total returns have been particularly strong over the last three years, and are ahead of VN Index and peer returns over the last 12 months, when markets have been volatile. VOF’s share price discount to NAV has narrowed, but it remains wider than the peer group average. The board has taken steps to address the discount, moving VOF’s listing to the LSE’s Main Market in 2016, starting a dividend programme in 2017, and agreeing a reduced management and incentive fee structure in 2018. The board recommends that shareholders vote against discontinuation at the forthcoming AGM, highlighting the promising outlook suggested by market fundamentals, as well as the manager’s strong track record.
Investment strategy: Private equity-style approach
VOF invests across three main asset class segments – listed equity, unlisted equity and private equity, with the manager focusing on privately negotiated deals to secure higher potential returns. Listed equities comprise 70% of the portfolio, but most holdings are sizeable minority stakes originating from private equity or privatisation deals, which VOF is often able to sell on to a strategic investor at a premium to the market price. The manager takes a medium-term view, favouring a concentrated, high-conviction approach to investment selection. The portfolio is focused on the domestic economy and is well diversified by sector.
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