Nanjia Civetta Fund Review – that will be the topic of today’s article.
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Table of Contents
Where is this fund usually sold?
This fund is sold globally, but especially in areas with plenty of expats such as Thailand, Qatar and the UAE.
The fund is often sold on investment platforms such as Ardan, Investors Trust and RL360.
What is the fund investing in?
It is investing in South East Asian stocks and the ASEAN area. They are doing this because they say that valuations look cheap, which is true.
More specifically, they are investing in ASEAN’s small and medium-sized firms, and looking for idiosyncratic pricing – in other words prices that look cheap relative to the “fair value” of the security.
This is easier to do in frontier and developing markets, because there are fewer analysts looking at these markets.
In comparison, if a stock listed on the US S&P500 index becomes overly undervalued, it doesn’t last for long, because so many people are looking at the market.
What are the typical costs associated with this fund?
There are different ways to charge using this fund, including initial and ongoing charges. 1%-2% per year is normal.
The fees for the investment platform will be separate to this.
What are the positives associated with this fund?
The main positives are:
- The recent performance has been impressive. The fund is up over 33% for the year, up to December 14, and doubled last year.
- ASEAN is an under-serviced region , and stock prices do look cheap. The strategy could therefore work.
- Small and medium sized firms have been affected by the pandemic. Opening up could benefit them more than larger ones.
What are the negatives associated with this fund?
The main negatives are:
- Past performance isn’t always the best indicator of the future. The fund could be due for a correction.
- The strategy has worked until now because few analyses focus on the ASEAN region. It is now very difficult to stock pick in the US stock market, unlike in the 1950s when Warren Buffett was doing this so well, due to an increase in institutional investors. If and when more firms look to ASEAN stocks, this strategy could become obsolete.
- Nanjia use advisors to distribute the funds, and they are available on third-party platforms. This makes sense on many levels, but that does mean that clients are exposed to the risks coming from an incompetent or inexperienced advisor. What is more, it is normal that because this fund is held in tandem with others, that the other funds drag down the average performance. In this situation, it makes sense to have a portfolio review, which I have helped clients with in the past.
- It is a high-risk fund, which can do very well. This is also a positive, but the fund shouldn’t be a majority of your portfolio.
Conclusion
This is a good fund to use as part of a wider portfolio. The issue comes if the fund is offered on unsuitable investment platforms, or there are issues with the wider portfolio construction – for instance too much is put into this one fund.
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Further Reading
In the answers below, taken from my online Quora answers, I spoke about the following issues and questions:
- What is a financial bubble and how does one identify it? Why is it so difficult to take advantage of bubbles?
- How can you keep to New Year’s resolutions?
To read more, click on the link below:
