Just about finished rounding off 2016.

An unexpectedly good year.

Overall return of +21% in GBP terms. Helped of course by the Brexit, the weakening of the pound and the Tramp rally.

Best perfomers:
=Resources:
- Pan African Resources - sold in the first half up +239% (excluding divs) - unlikely I was going to better than in H2
- Junior Gold +104%
- Blackrock Gold and General up just over +80%

While still very good performances the latter 2 actually lost ground in the second half.

- First State Global Resources +44% in SGD terms (excluding divs), which would be around 68% in sterling terms after the GBP tanked

=Russia focused:
- JRS - JPM Russia Investment Trust +71% (excluding divs)
- IEER - iShares Eastern European Investment Trust +57% (excl divs)
These aren't necessarily long term holds and so I was happy to have taken views on a beaten up area. Again it shows though how a good active manager can do better than a simple ETF.

=Other Emerging Markets/ Frontier Markets
- Did very well with 20%-30%+ gains
- Templeton Frontier Markets finally picked up again too +29%

=Japan - Schroder Tokyo Fund +28%

= US - Schroder US Smaller Companies +43% - again a surprise given I think US is overvalued, though maybe small caps were less so. Again the currency aspect helped a lot

= Thailand funds generally up between 11% - 24% in THB terms. So not counting the GBP's devaluation in there. Interestingly my active funds did less well than index based funds. It happens from time to time. So while a good year, a bit disappointing a few under-performed the index

Losers:

= UK based property funds
- SLI Ignis -6%
- Henderson UK property -8%
Relatively mild really as biggest losers. Also excludes dividends which would be around 4% each, so just small losses

Disappointing in some ways was CF Woodford equity income which only returned just over +3%. Then again many Uk funds struggled. In the UK, best performances were from Small caps like Marlborough UK Microcap +15%

Overall an unexpectedly good year as I wasn't that positive at the start

You're crazy AyG, should have invested all your money in chairs, and then sat on them.

Yes GBP lost around 17%. I tend to use the BOT mid rates hence the diff. So probably small single digit positive returns in THB terms. Still beats THB cash and holding too much in sterling.

If I recall rightly last year when I put in GBP and THB, you then converted it to USD to say it was low Every silver lining has a cloud though if you look for it

The main thing was around 90% of my investments by value showed positive returns in base currency.

Actually only around 1/3 of my base currency on investments is GBP - largely UK/Europe/developed markets. Around 60% is denominated in THB and SGD, with 90%+ showing positive returns. Most of these are Asia/ Thailand focused and nothing to do with GBP

As we know, it's the underlying currency exposure that counts rather than base currency of a fund. So with a lot of Asian and THB equities denominated in SGD and THB currencies, and over half of my equity exposures are to Thai and Asian equities, I'd look at it the other way round.

So it would  be wrong to say gains are illusionary. In my case given over half the underlying exposures are to Asian/Thai equities it would be more accurate to say losses on revaluing GBP exposures reduced gains on the SGD and THB side of things. Significant parts of these Thai and Asian equities so have nothing to do with sterling at all.

That said, GBP and / or THB values are only really what I care about. So being significantly up in GBP terms and OK positive in THB will do me OK.

BTW If you want to measure your returns in THB though, with only 8.5% in Thai equities you're taking on a lot of FX risk there, as all the other underlying 90%+ underlying exposures come with FX risk.





 

The thing to bear in mind though is that since a few years after the 1997 Asian crisis, when Thailand started to repair the damage (most of this century) GBP has been in a downtrend vs THB. So while it's not easy to predict short term, it's been in a pretty clear downtrend, just a bit more drastic following Brexit. UK is not exactly positioned for a strong currency in the next couple of years either

So for most of the 21st century anyone with key assets in sterling would have been seeing a gradual erosion of their wealth in THB terms, and adds an extra hurdle to investment returns from UK.







For the corruption and malpractice that could be said of pretty much any emerging markets and many of the markets in Asia full stop. Hence the benefit of active fund managers who are closer to the market.

 

ANW is just one investment trust and isn't really representative of what is out there for active management funds for Thai equity. Offshore outside Thailand perhaps. Investment Trusts perhaps.

As I've said for a long time the choice of offshore Thai investment vehicles is limited and often poor. The best Thai equity funds are bought onshore in Thailand.

ANW used to do OK, and for a while was an exception, but has struggled in recent years. Aberdeen funds generally generally have been struggling over the last few years. ANW is another one that falls under that category.

If adding to Thai equities, I wouldn't choose ANW and I wouldn't choose an investment trust either based on what's available. I'd buy an onshore actively managed unit trust.

- Historically ANW's NAV premium/discount is all over the place and very unpredictable. They've even referred to a few times in their annual report as an issue. May not be suitable if you are likely to want to sell large amounts. Sod's law the discount will be against you if you need or want to sell and generate cash

- It really isn't very liquid. The volumes are small. I have similar problems with other ITs. They are fine for developed markets for most amounts and small amounts elsewhere but less so for these type of markets. If you're buying/ selling a few hundred pounds/ few thousand maybe in one go. Maybe even a couple of tens of thousand if you are lucky on a good day. You can be sat waiting a while, not get the volumes or not get the prices

- In addition to the NAV issues the spreads can be annoying, eg as I look at the moment on two different platforms it is quoted: buy 515 sell 505 = approx 2% difference. Volumes actually look OK today. Looks a day where the sellers are more popular. Some days no-one wants to sell much and some days no-one wants to buy much.

With a unit trust on the other hand, just prior to the King's passing as well as for other reasons, I wanted to sell around THB 5mn. Very easy to do with a unit trust and certainty no problems with volumes and knowing I'd be dealing based on NAV. I'd have been concerned wanting to sell over GBP 100k from ANW at that point in time from a UK investment trust.

Then specific to ANW as you say, the performance has been struggling, as in the chart.

In addition to struggling for actual performance, I believe the discount has widened over the last 10 years. NAV has actually done better than the share price but you don't get the benefit of it, because of the whims of the buyers/sellers in the market at those points in time

On top of that, had someone bought in say 2013 they may well have bought at a premium/ close to NAV. It's now well into double digits. So you really have to think about timing. In that case there's a good 15% loss on the NAV price. No-one can predict where the discount/ premium will be on this one it's like one of those green charts on a medical machine measuring vital signs in flux

Morningstar gives a flavour of some of the onshore active managed funds that have consistently been beating the index over 10years

tools.morningstarthailand.com/th/fundquickrank/default.aspx?Site=th&LanguageId=en-TH

UOB's Good Corporate Governance Fund for example has been a favourite of mine for a decade or so. Now happens to be my largest single Thai equity fund holding.

tools.morningstarthailand.com/th/snapshot/snapshot.aspx?id=F000000RG3&LanguageId=en-TH

2016 it under-performed the index though funnily enough Never any guarantees as we both know. But if picking one I'd go for this.

Bualuang (Bangkok Bank's AM arm) also run a consistently good fund. Looked at it many times, but none of my providers offer it, and didn't want to open another account specially.

Thanks for the concern.  She has no relatives, so legacy is not an issue.  Incidentally, Fidelity Thailand is an open ended fund, so no discount to worry about.  The investment trusts she holds have a strong discount management policy, so that won't be a particular issue.