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Vietnam Holding reports on year of transition

Vietnam Holding reports on year of transition

Vietnam Holding reports on year of transition – Vietnam Holding reports that its NAV increased by 6.6% over the year to the end of June 2018, compared to a full year total return of 17.2% for the Vietnam All Share Index. The manager says the underperformance can be explained partly by the widening performance gap between large-cap stocks and mid-cap stocks (VNH is overweight mid caps) but, while listing the stocks that drove the index’s performance, makes no mention of the stocks that contributed to the fund’s performance, maybe because the fund has a new manager.

After the year-end Dynam Capital took over the management of the fund (commencing on 16 July 2018) on substantially reduced fee terms compared with those of the previous manager. The team is focused on continuing its value-driven mandate.

At the AGM on 21 September 2017, the previous board stepped down and, subsequently, five new directors were appointed in their place. The new board initiated a broad review of all aspects of the fund, particularly the areas of corporate governance, investment management and share buybacks/discount level.

Claw back of bonus

The chairman says that one particularly unsatisfactory feature of VNH was the previous board’s entitlement to a share of the then investment manager’s incentive fee, and, in the case of the former chairman, substantial discretionary bonuses. In the new board’s view, such entitlement and payments created a conflict of interest, as one of a board’s key duties is assessing the performance of its investment manager. The new board has removed any such contractual entitlement and will not be receiving incentive fee payments or bonuses.
Furthermore, the previous report failed to fully disclose the previous board’s full remuneration, in particular the award of a bonus of $150,000 paid to the former chairman in 2016/17. The previous board also awarded and paid the former chairman a bonus of $100,000 the day before she stepped down from the board in September 2017. They have successfully negotiated the repayment of $125,000 of such bonus payments from the previous board.

VNH : Vietnam Holding reports on year of transition

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