We believe that the 10-year anniversary of the AMP Capital China Growth Fund (ASX:AGF) is the right time for all unitholders to decide on its future. We are proposing to wind up AGF because: 1) AGF’s performance has been less than its benchmark since launch; 2) The discount to NTA had averaged 20% since the launch; and 3) The responsible entity has failed to take effective action to reduce it despite AMP earning $60.1m in fees to end December 2015. LIM is taking this action reluctantly as it’s been left with no other choice following repeated requests to AMP for an open ending or unlimited redemption offer from AGF. If our proposal to wind up AGF is not passed, the recent narrowing of the discount could significantly wide, therefore, recommend that all unitholders vote “FOR” our resolution to wind up AGF so that they can realise close to the NAV of their units.
One of the problems with unlisted managed funds is that one is never sure what affect the manager's renumeration based on funds under management has on the running of the fund. One would hope that the stricter requirements of an ASX listing would allay these fears, however as many have directors associated with the manager, the doubt remains.
I am always happy to receive a discount in a stock. It provides a greater yield and less volatility. Illiquid stock on our market like China A would be expected to be discounted. Increasing the yield to say 6%, that may require some capital sell down, would make AGF more attractive and create greater turnover. I want to hold my holding and may purchase more! regards Steve Small