New Asia equities fund with no annual management fee
Genevieve Cua
Singapore
FORMER financial journalist turned fund manager Teh Hooi Ling has set up a fund investing in Asia-Pacific equities. She has joined Swiss-Asia Financial Services, and the fund is called Inclusif Value Fund (IVF).
The fund will not charge any annual management fees. Early investors who get in during the initial offer period of six months starting in June will receive a 20 per cent discount on performance fees. The performance fee is pegged at 20 per cent, and is charged when the fund generates positive returns.
Early investors, however, will pay 16 per cent as long as initial amounts invested in the six-month offer period remain invested. The fund is open only to accredited investors. The minimum subscription is S$160,000.
Ms Teh was previously executive director and research head of Aggregate Asset Management. Aggregate's fund also does not charge an annual management fee, but there is a performance fee.
Swiss-Asia offers dedicated incubation services to help independent investors, consultants and fund managers launch their business operations. The firm manages 35 funds with a total asset size of US$2.5 billion. The IVF targets a return of 10-12 per cent a year net of fees over the long term. The fund aims to invest in deep value stocks - that is, those trading at a 40 per cent discount to the net tangible assets. "If a company has net tangible assets of $1 per share, made up of buildings, machinery, inventory and cash, after deducting all their liabilities, and their shares are trading only at 60 cents, that's the type of stocks we will buy. Currently, there are some 1,000 stocks in Asia-Pacific which meet the criteria," Ms Teh said.
She added that there are three golden rules for investing that will generate higher than buy-and-hold index returns. One is the value approach, buying stocks that trade below their fair value. Two is to have a clear sell discipline. "Sell stocks in your portfolio that are no longer cheap, and recycle your capital into other cheap or value stocks," she advised. The third principle is to always be guided by valuations. "Have the courage to stay in, as well as out of the market," she said.
Ms Teh believes that there are still ample opportunities in Asia even though stocks are not as cheap as last year, given the strong run-up in prices since November.
