Witan Pacific Investment Trust PLC is managed by three managers: Aberdeen Asset Management Limited, Matthews International Capital Management, LLC and Nomura Asset Management U.K. Limited. It is focus on Asia Pacific region. But in 2012, Nomura was taken place by MW GaveKal Asia Limited.
Witan Pacific Investment Trust PLC is an investment trust, which produces investment management, the number of shares in this company is fixed, new money could not get in, but also never return money back. For this part a comparison between Witan Pacific Investment Trust PLC and Pacific Horizon Investment Trust PLC will be used. Horizon is also a investment trust which focus on Pacific Asia region, the comparison between these two companies will be benefit for the research for the comparison of competitors.
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Objective is the main expectation for the fund management, the establishing of objectives is the strategy of the fund management. The main targets for a fund are income and capital growth, so the differences between the objectives for different funds are from the details: how to improve the income and capital growth, risk management, time period for investment, liquidity, ethics, investments target (domestic vs. international, stock vs. bond) and so on. The Objective of Witan Pacific Investment Trust PLC is to provide diversified portfolio, the main target is Asia Pacific region aims to outperform the Index. This objective hasn’t been changed since 2008, and it is same to Horizon. For Witan, the objectives are to provide a balanced portfolio of investments in the Asia-Pacific region plans to gain from the MSCI AC Index (“MSCI AC Asia Pacific Free Index”). The difference between these two funds is Witan is focus on the whole Asia Pacific region, Japan was excluded by Horizon, for Witan, due to include Japan, the investment scope is more widely than Horizon. In 2011, the Moody’s downgraded Japan’s sovereign debt rating, because of Japanese government deficit increasing quickly after the Financial Crisis in 2007. As a large economic entity in Asia Pacific region, Japan has a GDP of 5.98 Trillion USD, for Witan, it is quite a large market to invest, but from the figure of GDP growth rate in the past 6 years it is not a good target, the economic growth rate is not looked very well. 2007 2008 2009 2010 2011 2012 China 13 9 9.2 10.3 9.3 7.8 India 9.4 7.3 5.7 9.7 7.9 4.5 SEA 6.3 4.8 1.7 6.7 4.5 5.7 Japan 2.3 -0.7 -6.3 4.3 -0.6 2.0 But for another statistic some reason for Witan to invest in Japan can be found, due to a large number of oversea businesses the Japanese GNI(Gross National Income) was increasing while the GDP( Gross Domestic Product) was going down. That means a lot of companies was still gaining, due to the large market size the Witan could find opportunities for getting profits.
Witan Pacific Investment Trust PLC Annual Report (2012) stated: the fund was managed by two managers in order to actively avoid risk, the growth of the fund are from capital return, mention on the discount to the net asset value for a target companies’ share, giving discretion to the manager of cash holding, use a moderate levels of leverage to get long-term return, to increase the dividend per share, testing the share carefully, and for increase the income they tried to control costs. The strategy for Witan in the past 5years have changed, but no significant had happened, the mutli-manager was started since 2005, but in 2008, due to the Financial Crisis, the main issue which they were facing is the high financial risk, therefore, the multi-manager policy tended to focus on the risk management. The chairmen of Witan investment Trust PLC stated in the annual report that since the multi-manager started in this company, the investment portfolio has outperformed benchmark by 2.6% per annum. 2008 2009 2010 2011 2012 Return per ordinary share 5.74 -38.66 47.05 47.40 -14.25 Discount to NAV 14.4 19.4 17.1 14.5 17.8 NAV 188.9 152.3 199.0 248.0 235.6 The capital return due to the disadvantageous economic environment was undulated in the past 5years, when the economic was going well, the return is increasing, while the economic was going down, the return decreased. The discount is also a main income for the investment fund, the net asset value attracted the investors to commence it. The discretion for the manager for the managers means greater freedom and trust, and as the limited size of discretion the risk was controlled also. The cost and expense control is an important method of developing the net asset value. There is not argument for the attraction of high income for the investors, but as a close-ended fund, the size of the fund depends on the balance of the fund: if the income for the investors over size, the investment for the coming year will not enough, the result is the income for the next year will be decrease, therefore the dividend show be prudent distributed.
In 2011, the annual report from Witan stated that the Aberdeen tended to pay more attention to the stock selection process than market capitalization weightings. While Nomura will firstly focus on the country and industry weighting. The Graph above had showed some detail of the habit for Nomura to Choose invest country: Japan, Australia, India, South Korea, China, Taiwan. And the personal preference was taken to the job, that is not a good performance, the investment rate of Japan always took the largest part even while the Japanese GDP was decreasing by that time. Otherwise the Aberdeen is not always following the step of index, and as a active manager, the overweight and underweight are quite clear. The Graph has showed the mean reason of why the Nomura’s income is quite near to the benchmark. For most of the investments Nomura is in step with the index, that makes Nomura not doing quite good but also not very bad. 2008 2009 2010 2011 2012 Aberdeen 3.0 2.4 10.2 8.7 7.3 Nomura 1.9 -1.6 -0.4 4.1 0.1 Performance against the benchmark 2008 2009 2010 2011 2012 Aberdeen 5.7 -15.5 39.8 28.7 0.6 Nomura 4.6 -17.5 29.2 24.1 -5.9 Index 1.9 -17.9 29.6 20 -6 Witan 2.6 -19.5 33.4 25.8 -4.1 Performance The performance against means the performance of Aberdeen or Nomura against the index (benchmark), the table 1 stated that the Aberdeen is outperformance in the past 5 years, but Nomura is just around the performance. The performance of Index is related to the global economic environment, in 2009, the Financial Crisis had got to the most serious time, because of the force of economic inertia the economic haven’t got to the bottom in 2008, but it was on the way, so the speed was going down at that time. And in 2009, the real influence of the Financial Crisis had been shown, the negative mood full of the market, that made the economic more serious. According to the table, Aberdeen always goes ahead of the market. The manager for Aberdeen is an active manager, that means the manager is more discretionary for the fund management, for this manager the 10% discretionary fund will effective. The investments are more risky, but with more profits. 50 shares was hold by Aberdeen in 2012, that was more concentrated and challenge, speculator may like this kind of manager. Actually most of the active managers are worse than the index. Nomura is a passive manager, which is more rule-based, that is more likely to be a Japanese style of fund management, for Nomura, it hold around 200 stocks, so that the risk can be decreased enough, and because of the stocks are based on the analysis of country and industry weighing, it will not take a long time to choose stocks. This kind of manager will not give a very huge income to the investors, but also will not make a serious loss. But while the market is not effective enough, the active manager will be more popular. Stocks value performance Aberdeen 50 56% 1.3% Nomura 200 44% 5.9% Result of the two funds’ growth Table above had showed the performance of the two fund managers in the past 7years, Aberdeen held 50 stocks used the same size of capital and the result is 1.27times as what Nomura did in the past 7 years.
2008 2009 2010 2011 2012 NAV per share 188.9 152.3 199.0 248.0 235.6 Mid-market price per share 161.8 122.8 165.0 212.0 193.6 Discount to NAV 14.5 19.4 17.1 14.5 17.8 Share price high 188.0 176.0 177.0 221.6 221.5 Share price low 156.0 110.0 106.2 163.0 174.9 The performance of Aberdeen is absolutely well, the From the graph above it can be easily found the performance of Aberdeen is much better than the Nomura, in this fund the two managers both have controlled half of the capital, but after 7years growth the Aberdeen became larger than Nomura. As a fund manager Nomura has under performance with Aberdeen since the multi-managers was started, although the performance of Nomura was not bad, but the underperform hasn’t been changed for 7 years that was not the shareholder wanted.
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