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The AFC Asia Frontier Fund (Non-US) (AAFF) USD A-shares lost −1.6% in October 2017. The fund underperformed the MSCI Frontier Markets Asia Net Total Return USD Index (+5.2%) the MSCI Frontier Markets Net Total Return USD Index (+1.2%), and the MSCI World Net Total Return USD Index, which was up +1.9%. The performance of the AFC Asia Frontier Fund A-shares since inception on 31st March 2012 now stands at +69.9% versus the MSCI Frontier Markets Asia Net Total Return USD Index, which is up +63.9%, and the MSCI Frontier Markets Net Total Return USD Index (+54.0%) during the same time period. The fund’s annualized performance since inception is +10.0% p.a., while its YTD performance stands at −0.3%. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 8.90%, a Sharpe ratio of 1.09 and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.34, all based on monthly observations since inception. The best performing indexes in the AAFF universe in October were Mongolia (+10.5%), Vietnam (+4.1%), and Cambodia (+4.1%). The poorest performing markets were Pakistan (−6.6%) and Iraq (−1.5%). The top-performing portfolio stocks this month were: a junior mining company from Mongolia (+36.4%), a cashmere producer from Mongolia (+31.6%), a Pakistani leasing company (+20.5%), a Mongolian industrial company (+19.6%) and a Mongolian oil producer (+17.8%). In October, we added to existing positions in Laos, Mongolia, Pakistan, and Vietnam. We exited a Mongolian food company and Vietnamese noodle producer and purchased a new Vietnamese food company. Additionally, we partially sold two companies in Vietnam, a consumer conglomerate and a consumer beverage company and also partially sold one construction material company in Mongolia. As of 31st October 2017, the portfolio was invested in 116 companies, 1 fund and held 4.7% in cash. The two biggest stock positions were a pharmaceutical company in Bangladesh (7.9%) and a pump manufacturer from Vietnam (3.1%). The countries with the largest asset allocation include Vietnam (27.2%), Pakistan (19.6%), and Bangladesh (16.5%). The sectors with the largest allocations of assets are consumer goods (29.7%) and industrials (14.9%). The estimated weighted average trailing portfolio P/E ratio (only companies with profit) was 15.71x, the estimated weighted average P/B ratio was 2.61x, and the estimated portfolio dividend yield was 4.14%.

Source: Asia Frontier Capital Limited

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