Asian equity fund charges only for performance

Early investors in the Inclusif Value Fund, launching in July, will get a discount on the performance fee, says Ms Teh Hooi Ling.
Early investors in the Inclusif Value Fund, launching in July, will get a discount on the performance fee, says Ms Teh Hooi Ling.

Journalist turned fund manager Teh Hooi Ling has joined Swiss-Asia Financial Services as a portfolio manager of a new fund investing in Asia-Pacific equities.

The Inclusif Value Fund (IVF) goes live in July, and is open to accredited investors with net personal assets of at least $2 million or income of at least $300,000. The minimum subscription is $160,000.

A value investor, Ms Teh says the fund will focus on stocks that are trading below fair value. For example, if a firm has a fair value of $1 per share and the stock is trading at 60 cents, it can be considered to be in the fund. One way of determining the fair value is to work out the replacement cost of the asset.

"Market prices can deviate from fair value because of investor sentiment, but the further market prices move away from fair value, the higher the probability they will revert to fair value," says Ms Teh.

The fund has zero management fees. Instead, there will be a performance fee of 20 per cent, charged when it generates positive returns.

Ms Teh says that investors who get in within the first six months of the launch will receive a 20 per cent discount on the performance fee. This works out to a performance fee of 16 per cent. For every dollar of new profit made, the fund gets paid 16 cents.

Early investors will pay the 16 per cent fee as long as initial amounts invested in the six-month offer period remain invested.

The fund is aiming for a net annual return of 10-12 per cent over the long term for investors.

Ms Teh believes there are still "ample opportunities" in Asia in terms of cheap stocks.

Swiss-Asia offers dedicated incubation services to help independent investors, consultants and fund managers launch business operations. It manages 35 funds with US$2.5 billion (S$3.5 billion) in assets.

Ms Teh was previously executive director and research head of Aggregate Asset Management. To learn more about IVF, accredited investors can e-mail hooiling.teh@swissasia-group.com and check out https://www.inclusif.com.sg/

Lorna Tan

A version of this article appeared in the print edition of The Sunday Times on May 28, 2017, with the headline 'Asian equity fund charges only for performance'. Print Edition | Subscribe