AMP Capital will “investigate options” to sustainably close the discount to the net asset value that its Capital China Growth Fund (AGF) trades at.
This move comes after the $2.7 billion hedge fund manager, LIM Advisors, called for more timely and proactive engagement to reduce the discount on the AMP Capital China Growth Fund.
LIM Advisors is the largest independent unitholder in the ASX-listed AGF and said that the fund’s units have persistently traded at a discount to their underlying net asset value.
“Despite the performance of the Chinese stock market over the past few months, AGF units have traded for an extended period at prices which represent a substantial discount to their underlying net asset value. At present that discount is 26 per cent,” a statement from the manager said.
As a result LIM Advisors is seeking to “decisively reduce the discount on AGF units and wishes to work proactively with AMP to achieve this”.
AMP Capital said that it was continuing to investigate solutions with the assistance of its investment advisers.
“We always take the concerns of our investors seriously and, as part of our fund governance, we have considered many options to sustainably close the discount to net asset value that the fund trades at,” an AMP statement said.
“In previous years, many of these options would not have resulted in the discount being sustainably closed or were not in the best interest of investors. However, recent deregulation and ongoing clarification of local taxation laws mean some of these options may be viable in the future and, importantly, in the best interest of unitholders.”
AMP said that it had instated a number of initiatives to ensure the AGF was performing.
“For the one-year period ended 30 June 2015, the fund’s net return (calculated after fees, expenses and taxes) was 137.7 per cent,” AMP said.
LIM Advisors has advised AMP that unless prompt action is taken by the responsible entity to address the fund's discount before 31 August 2015, LIM will be take the matter directly to unitholders and call an extraordinary general meeting for unitholders to consider initiating determined action.