Michael Watt, director and manager of the Henderson TR Pacific investment trust says 2001 was a stink...
His comments came as the trust reported its preliminary results for its financial year ended in December, which showed that the net asset value fell to 79p from 85.7p and that a stubborn near-20% discount had opened up on the stock.
The trust made a negative return of 7.7% compared to the return of 2.3% for the peer group and a 0.5% rise in the benchmark index due to the storming performance of many Asian stocks during the last quarter of 2001.
Watt blamed the poor performance on the decision to stick with investments during the slide of the first three quarters of last year.
Once the markets were jolted by the events of 11 September, Watt admitted he got "cold feet" and deliberately went underweight while reducing the gearing level to 0% by the end of that month.
The fund therefore missed out on the returns of the last quarter of the year.
Indicators were improving, however, for sustained recovery through this year, particularly through plays in South Korea.
Compared to December 2000, the fund has doubled the proportion of its portfolio held in that market to 28.2%, while reducing its exposure to China, Hong Kong, Thailand, and Singapore.
That is double the benchmark index weighting, but Watt is convinced that the economy there is ripe for picking.
He says the economy there will benefit along with other Asian economies from the cyclical upturn in the global economy.
More specifically, South Korea is ready for a consumer boom led by cheap interest rates, and an increasing propensity to stop saving and start spending -fuelled by the development of more consumer credit products.
With structural reforms more advanced than in other economies reflected within the portfolio, and share prices still relatively cheap despite recent months' gains, there should be scope for significant upside.
Shares in Henderson TR Pacific are off by 1p today to 68p, giving the company a market capitalisation value of £139m.
Watt said the current low share price, coupled with the discount and the propects moving forward was putting him in a position to consider boosting the share buy-back programme.
Last year the trust bought back slightly less than 2 million shares, although so far this year it has not persued the strategy.
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