The AFC Asia Frontier Fund (Non-US) (AAFF) USD A-shares increased by +0.9% in December 2019 with a NAV of USD 1,273.43. The fund outperformed the MSCI Frontier Markets Asia Net Total Return USD Index (-3.2%) but underperformed the AFC Frontier Asia Adjusted Index (+1.3%), the MSCI Frontier Markets Net Total Return USD Index (+4.3%), and the MSCI World Net Total Return USD Index (+3.0%). The performance of the AFC Asia Frontier Fund A-shares since inception on 31st March 2012 now stands at +27.4% versus the AFC Frontier Asia Adjusted Index, which is up by +8.8% during the same time period. The fund’s annualized performance since inception is +3.2%, while its 2019 performance stood at -6.7%. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 8.82%, a Sharpe ratio of 0.28 and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.32, all based on monthly observations since inception.
The best performing indexes in the AAFF universe in December were Laos (+8.4%), Mongolia (+4.5%), and Pakistan (+3.7%). The poorest performing markets were Bangladesh (−5.9%) and Kyrgyzstan (−2.3%). The top-performing portfolio stocks this month were a Mongolian leather producer (+37.1%), a Mongolian trading company (+34.4%), a Mongolian junior copper miner (+28.6%), a Mongolian real estate company (+28.2%), and a Papua New Guinean drug store chain (+24.6%).
In December, the fund partially exited one Mongolian holding and two Vietnamese holdings and added to existing holdings in Mongolia and Vietnam.
At the end of December 2019, the portfolio was invested in 76 companies, 2 funds and held 5.7% in cash. The two biggest stock positions were a pharmaceutical company in Bangladesh (9.7%) and a pump manufacturer from Vietnam (8.3%). The countries with the largest asset allocation were Vietnam (22.6%), Mongolia (17.2%), and Bangladesh (16.5%). The sectors with the largest allocation of assets were consumer goods (24.0%) and industrials (18.2%). The fund’s estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 8.09x, the estimated weighted harmonic average P/B ratio was 0.78x and the estimated weighted average portfolio dividend yield was 4.21%.