EFM : Edinburgh Dragon hurt by Standard Chartered and City Developments
Edinburgh Dragon underperformed its benchmark over the year that ended on 31 August 2014, delivering a 10.4% return on net assets as compared to a 13.2% return, in Sterling terms, on the MSCI All Countries Asia ex Japan Index. The report says the problem lay with a couple of holdings – Standard Chartered (they say reflecting the more challenging conditions in emerging markets) and City Developments (hit by government measures to calm the local property market in Singapore). The discount widened as well (from 9.1% to 11.3%) and so the return to shareholders was just 7%. The underperformance was concentrated in the first half of the fund’s accounting year however (in the second half they outperformed by 1.9%).
The manager’s report says the best performers in the portfolio included three companies in India – Housing Development Finance Corp (HDFC), an Indian mortgage and life insurance conglomerate; ICICI Bank, a leading commercial bank; UltraTech cement, which was boosted by anticipation of a pick up in cement demand as the new government increases spending on infrastructure; and Hero MotoCorp, the largest producer of motorcycles in the world. The report also mentions the contribution from Samsung Electronics.