Hereford Funds – Firth Asian Value Fund
April 2013
April 2013 Investment Review
In April 2013 the Fund’s net asset value rose by 1.0% (after deducting all fees and expenses). By comparison the MSCI AC Asia ex Japan Small
Cap index rose by 2.6% and the MSCI AC Asia ex Japan index rose by 1.8%.
Most of the Hong Kong/China part of the portfolio underperformed in April during a month of bad news. Fitch cut China’s long term local currency
credit rating from AA- to A+. Moody’s affirmed its rating for China but lowered the outlook from positive to stable. The IMF cut its global economic
outlook and warned over China’s local government debt. Poor 2012 results for many HK/China companies reported in the last week of March
affected share prices in April. None of the underlying cyclical or structural issues are necessarily new and we added to several of our HK/China
positions on share price weakness.
India was the best performing small cap market in April. As yet we have no exposure here although we have been doing due diligence on some
companies. Malaysia, in what was perhaps a pre-election run up, was the second best performing small cap market in Asia. Korea and Taiwan
small caps also did well especially in contrast to most Southeast Asian markets which showed some relative weakness in April.
Our holding in Shinsegae, a Korean department store operator, was sold completely during April. We had originally started buying in early 2012
following the demerger of its hypermarket business. Our view at that time was that the price did not take into account the potential from a more
focussed department store business and the opportunity to tidy up its balance sheet by selling non-core assets such as a valuable stake in
Samsung Life. It turned out that we were over-optimistic. In fact the company increased borrowing to levels that we consider imprudent.
Shinsegae has form as regards excessive leverage and we should have known better. In 1998 it flirted with bankruptcy and was forced to sell its
warehouse membership stores to Costco in order to reduce debt.
We trimmed positions in Roadshow (bus advertising) and Samson (furniture) in Hong Kong, and in two Indonesian retailers, Matahari Putra and
Ramayana Lestari, as well as in Ottogi a South Korean maker of sauces and seasonings. This follows some continued good performance from
these stocks. We established two new positions in April, a South Korean education company and a HK/China spa/cosmetics company.
Key Information Hereford Funds – Firth Asian Value Fund
NAV A Shares (30/04/13):
Total Fund Size:
Strategy Assets:
Fund Launch Date:
$113.42
$49 million
$156 million (a)
31/05/11
Performance (%) (net of fees and expenses)
Jan
Feb
Mar
HFFAVF1
Small Cap2
Asia ex Japan
HFFAVF1
2
Small Cap
Asia ex Japan
HFFAVF1
3
3
2
Small Cap
Asia ex Japan3
-
-
-
Apr
May
Jun
Jul
-
-
-1.2
-2.4
-2.3
Jan
Feb
Mar*
Apr
May
Jun
Jul
1.9
1.6
-0.1
2.0
0.5
-2.2
1.0
2.6
1.8
HFFAVF1
Small Cap2
Asia ex Japan3
Nov
2.2
-1.1
-0.3
Jul
3.8
3.5
1.7
Oct
3.1
6.7
7.0
Jun
0.9
1.8
3.0
Nov
4.2
2.2
-0.5
May
-5.9
-7.8
-9.6
Oct
3.9
0.0
2.6
Apr
-0.9
-1.7
0.0
Nov
6.4
10.1
12.0
Mar
-1.4
-3.8
-3.1
Oct
-12.6
-16.3
-13.2
Feb
12.1
9.0
6.0
Sep
-8.5
-11.4
-9.9
Jan
6.1
10.0
10.8
Aug
0.6
2.8
1.1
Source: Bloomberg, Firth Investment Management
1. Hereford Funds – Firth Asian Value Fund 2. MSCI AC Asia ex Japan Small Cap USD Net Index
*Month end date used is March 28, 2013 as the last working day of the month due to Good Friday.
Aug
Aug
Sep
Sep
-5.9
-8.7
-8.3
-0.2
2.9
2.8
Dec
0.8
-1.2
0.6
2011
-19.7
-26.1
-20.2
Dec
2012
Dec
2013
3.3
3.5
3.1
29.6
22.4
22.4
9.0
8.6
1.3
Since Launch
13.4
-1.7
-1.1
3. MSCI AC Asia ex Japan USD Net Index (large and mid cap)
Source: Bloomberg, Firth Investment Management
*Both MSCI benchmark indices (Bloomberg: MSLUAAJN and NDUECAXJ) are net total return indices in USD. MSCI calculates net total return by reinvesting any
dividend income after deducting withholding taxes.
Country breakdown
Hong Kong/China
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Others
Cash
% of assets
42
5
9
6
1
9
13
1
4
10
Sectoral breakdown
Consumer Discretionary
Consumer Staples
Financials
Health Care
Industrials
Information Technology
Materials
Others
Cash
% of assets
54
8
3
1
10
7
3
4
10
Investment Objective
Hereford Funds - Firth Asian Value Fund is to generate long term capital growth from a portfolio of listed company securities in Asia (ex-Japan). The Compartment will
follow a value-based investing approach and will have a bias towards smaller capitalisation stocks.
The Compartment will directly invest primarily in shares of companies located in, incorporated in, headquartered in, listed on exchanges in or with significant
operations in or significant income derived from Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, the PRC, Singapore, Taiwan and Thailand. The
Compartment may also directly invest in smaller or developing economies in Asia such as Bangladesh, Cambodia, Laos, Pakistan, Sri Lanka or Vietnam. The
Compartment will not invest in China A Shares when investing in the PRC.
The Compartment will directly invest actively in a diversified portfolio of listed equity securities. The Compartment will generally only invest in securities admitted to
official listing on a recognized stock exchange, or dealt in on another regulated market. Although the Compartment intends to invest in a portfolio of not less than 40
stocks and not more than 100 stocks, it is not restricted in or subject to any material concentration or diversification restrictions, and may hold a more limited number of
investment positions.
The Compartment will typically be near fully invested but may hold liquid assets on an ancillary basis. Under normal market conditions, investment in liquid assets and
debt instruments of any kind will not exceed 15% of the Compartment's net assets. In exceptional market circumstances and on a temporary basis only, this limit may
be increased to 100% with due regard to the principle of risk spreading.
The Investment Manager intends to meet the Fund’s objective primarily through stock selection and country allocation based upon the investment advice of the
Investment Adviser. Typically stocks will be bought and held. This is not a trading strategy and it is not intended to attempt to time general market movements. While
portfolio returns will be measured against the Benchmark Index, portfolio management will not be constrained by reference to the index.
Fund Codes
Bloomberg
ISIN
Reuters
Sedol
Valoren
WKN
HFIRASA LX *
LU0618975774
NA
B64KS81
12853411
A1H9V4
* Share Class A
Fund Details
Dealing Day
Dividends
Investment Manager
Investment Advisor
Promoter
Fund Administrator
Custodian
Legal Advisers
Auditor
Daily
None - income accumulated within the fund
Swiss-Asia Financial Services Pte. Ltd. 8 Temasek Blvd, #43-01 Suntec City Tower 3, Singapore
Firth Investment Management Pte. Ltd. 180 Cecil Street, #13-03 Bangkok Bank Building, Singapore
VP Bank (Luxembourg) S.A., 26 Avenue de la Liberté, L-1930 Luxembourg
VPB Finance S.A., 26 Avenue de la Liberté, L-1930 Luxembourg
VP Bank (Luxembourg) S.A., 26 Avenue de la Liberté, L-1930 Luxembourg
Elvinger, Hoss & Prussen, 2 Place Winston Churchill, L-1340 Luxembourg
Deloitte, 560 Rue de Neudorf, L-2220 Luxembourg
Annual Management Charge
Share Class A
Share Class D
(b)
1.5%
2.0%
Annual Management Charge
Performance fee:
High water mark?:
Hurdle rate:
10%
Yes
MSCI AC Asia ex Japan Small Cap USD Net
Minimum Investment
Share Class A (b)
Share Class D
$100,000 initial / $10,000 subsequent
$10,000 initial / $1,000 subsequent
Order Transmission Information
Original Applications To:
VPB Finance S.A.
attn. Fund Operations / TA-HFF
P.O. Box 923
L-2019 Luxembourg
or, for transmissions via courier service,
26, avenue de la Liberté, L-1930 Luxembourg
Subsequent Applications Only Via Facsimile:
VPB Finance S.A.
attn. Fund Operations / TA-HFF
Fax: (+352) 404 770 283
Tel: (+352) 404 770 260
e-mail: [email protected]
(a) This refers to the total assets to which the Investment Adviser applies the reference strategy.
(b) Share Class A: these shares have UK reporting since launch and are registered with the BaFin for public distribution in Germany from 17/10/12.
Germany – Paying Agent as defined by German Regulation:
Marcard, Stein & Co – Ballindamm 36, 20095 Hamburg; Phone: +49/40.32.099.556, Fax: +49/40.32.099.206
(c) Share Class D: these shares have not yet been launched.
This document is for information purposes and internal use only. It is neither an advice nor a recommendation to enter into any investment.
Investment suitability must be determined individually for each investor, and the financial instruments described above may not be suitable for all investors. This
information does not provide any accounting, legal, regulatory or tax advice. Please consult your own professional advisers in order to evaluate and judge the matters
referred to herein.
An investment should be made only on the basis of the prospectus, the annual and any subsequent semi-annual-reports of HEREFORD FUNDS (the "Fund"), a
société d'investissement à capital variable, established in Luxembourg and registered under Part I of Luxembourg law of 20 December, approved by the Commission
de Surveillance du Secteur Financier (CSSF). These can be obtained from [the Fund, 26, avenue de la Liberté, L-1930 Luxembourg or from VPB Finance S.A., 26,
avenue de la Liberté, L-1930 Luxembourg and any distributor or intermediary appointed by the Fund].
No warranty is given, in whole or in part, regarding performance of the Fund. There is no guarantee that its investment objectives will be achieved. Potential investors
shall be aware that the value of investments can fall as well as rise and that they may not get back the full amount invested. Past performance is no guide to future
performance.
The information provided in this document may be subject to change without any warning or prior notice and should be read in conjunction with the most recent
publication of the prospectus of the Fund. Whilst great care is taken to ensure that information contained herein is accurate, no responsibility can be accepted for any
errors, mistakes or omission or for future returns.
This document is intended for the use of the addressee or recipient only and may not be reproduced, redistributed, passed on or published, in whole or in part, for any
purpose, without the prior written consent of HEREFORD FUNDS. Neither the CSSF nor any other regulator has approved this document.