Genesis Emerging Markets has reported an NAV that has barely changed over the six months to the end of December 2014 – falling from 578p to 576p. The share price fell by 4% however as the fund’s discount widened to 9.4%.
Following a regular internal review, the Manager has considered that a reduction in the management fee charged to the Fund to 1.25% (from 1.50%) of NAV is appropriate. Accordingly, this has been implemented as at 1 January 2015.
The manager’s report says holdings in the materials and energy sectors struggled under lower commodity prices and poor market sentiment. One such holding was the African oil exploration company Tullow Oil, which posted a 51% decline over the six-month period which had a significant impact on relative performance. Elsewhere, US and European sanctions imposed on certain Russian companies – including two of the Fund’s holdings, Novatek and Sberbank (down 30% and 57% respectively in US dollar terms) – also held the portfolio back, as did stock selection losses in South Africa and Zambia (through the portfolio’s exposure to First Quantum Minerals), and the underweighting in the strong Chinese market. On the positive side, a number of Indian companies, notably Kotak Mahindra Bank (up 50%) and Pidilite Industries (up 73%), were high on the list of contributors, while the portfolio’s overweight in this market was also beneficial. Stock selection gains in South Korea and being underweight in the weak Brazilian market were further positive drivers.
GSS : Genesis Emerging cuts fees