Within three months it has grown by 50% and currently stands at $ 322 million.
Registered in Cayman Islands and approved as a restricted foreign scheme with the Monetary Authority of Singapore, Sri Lanka Fund is a US Dollar denominated open-ended mutual fund or unit trust exclusively investing in Sri Lankan listed equities.
Its investment objective is to provide clients with medium to long-term capital appreciation with periodic returns by employing proactive investment strategies. It is managed by Carson Group’s Guardian Fund Management, which styles itself as the largest private sector held fund overseeing a portfolio of US$ 333 million as at end November 2010.
Carson Cumberbatch Director Mano Selvanathan told journalists yesterday the Group was convinced of post-war peace dividend; hence the relaunch of Sri Lanka Fund. “We are confident of the economic upturn in post-war Sri Lanka. We will promote Sri Lanka, the Colombo stock market and listed companies via Sri Lanka Fund through marketing agents (investment houses or funds) globally. For the less sophisticated and distanced global investors Sri Lanka Fund is the ideal platform to reap the post-war benefits,” he added.
Initially marketing agents will be firmed up in Europe including UK, France and Switzerland, and the Middle East including Dubai. Focus will be luring institutional, high networth individual investors as well as the Sri Lankan Diaspora.
“Whilst Sri Lanka Fund has a long-term perspective we have made a start because post-war we are in a position of strength to attract global investors,” Selvanathan said suggesting that progressively in tandem with the growth of the Lankan economy and the Colombo bourse the Fund’s reach and profile will be expanded.
The Company also said that Sri Lanka given its post-war transformation and exceptionally high growth potential is different and distinct to some of the popular frontier markets; hence remains more attractive despite current Price Earnings Ratio seeming expensive comparatively.
It was also noted that global investors are quite used to upheavals in frontier markets but remain engaged provided decent returns can be guaranteed along with sound macro-economic fundamentals.
Minimum investment to the Sri Lanka Fund is US$ 50,000 and depending on the initial marketing Carson will decide whether to reclassify the Fund to accommodate smaller minimum investment which is US$ 10,000. It allows subscriptions once a week whilst redemptions are also allowed in the same manner.
Since its relaunch by promoters — Ceylon Guardian lnvestment Trust Plc and Ceylon lnvestment Plc — Sri Lanka Fund’s Net Asset Value has grown to US$ 1.03 or Rs. 116. Its current investment portfolio has covered some of the key growth sectors — banks, finance and insurance, diversified holdings, food and beverage, hotels and travels and manufacturing. Some of these sectors have also got a huge boost in the Government’s 2011 Budget. Listed investments include John Keells Holdings, Aitken Spence Hotel Holdings, Commercial Bank, Cargills Ceylon and Royal Ceramics.
Selvanathan said, since Sri Lanka Fund targets foreign investors strict adherence to good corporate governance is ensured. Single company exposure has been limited to 25% of the portfolio and single sector exposure is 40% of the portfolio with zero exposure to Carson Group stocks even though they account for 10% of the Colombo Bourse’s market capitalisation.
Sri Lanka Fund Director and CEO of the fund management company Ruvini Fernando said that their excellent track record is likely to lure prospective foreign investors. The Compound Annual Growth Rate (CAGR) for the past 10 years of the fund manager’s portfolio is 43.46% as opposed to CSE’s 27.18%. Its year to date growth of portfolio is 130.6% in comparison to ASPI’s performance of 86.8%. Guardian Fund Management’s portfolio value had grown by 216% during the last financial year in comparison to 127% by the ASPI.
She also said the current policy changes of the Government with the opening up of the Capital account to both individuals and corporate is likely to see activity via cross border transactions.
“Hence we envisage both foreign inflows and outflows to increase for equity investments thus prompting the attractiveness of such funds as the Sri Lanka Fund to investors. Hence the Sri Lanka Fund could be marketed to resident/nonresident Sri Lankans, funds of fund investors and individual foreign investors wanting to flavour emerging markets and in turn tolerate a higher risk premium identified with such markets,” she added.
“Our investment process is driven by fundamental analysis and in depth research. We have relaunched the fund internationally and are looking to raise capital for listed equity only keeping with the priority of maintaining liquidity for the investors. We believe in an aggressive style of bottom up stock selection of companies exposed to growth sectors of the Sri Lankan economy where companies with competitive sustainable business models backed by good management. A bottom up approach of stock selection is applied, where individual company fundamentals take precedence over asset and sector allocations of the portfolio,” Fernando said.
“We as the managers of the fund see opportunity in marketing the fund given the changing dynamics both locally and globally. Hence we plan to put in place the structure to mobilise funds from both local investors and foreign funds/investors to SLF as we are confident that it’s a question of time before investors begin to see to attractiveness of the Sri Lankan equity story and thus the attractive valuations in the long term,” she added.
source - www.ft.lk
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