18th Apr 2019 11:18
LONDON (Alliance News) - Weiss Korea Opportunity Fund Ltd on Thursday said it underperformed against its reference index in 2018 due to widening preference share discounts.
Wess Korea posted a net asset value total return of negative 20% for the year versus a 15% decline in the MSCI Korea 25/50 Net Total Return Index in sterling terms. The company's NAV per share dropped to GBP1.499 from GBP1.912.
The fund's portfolio largely consists of preference shares issued by companies that are incorporated in South Korea, which often trade as a discount to common shares in those same companies. However, these discounts widened in 2018 which caused a drop in the value of Weiss Korea's portfolio.
An annual dividend for 2017 of 3.4155 pence per share was approved in June 2018 and paid in July, up 2.7% from a 3.3262p per share dividend for 2016. The company will declare its 2018 dividend at the start of May and it will be "based on dividends received primarily from investments in South Korean preferred shares".
Looking ahead, the company's investment manager - Weiss Asset Management LP - is planning on rebalancing Weiss Korea's portfolio toward preference shares that trade at wider discounts to their corresponding common shares.
The company is also offering shareholder the chance to realise all or part of their shareholding, although all directors and personnel associated with Weiss Asset Management will not be participating. This process began on Monday and ends on May 8.
Weiss Asset Management said: "Since the inception of the fund almost six years ago, conditions have changed somewhat. While the discounts are not as attractive as when we first launched the fund, the prospects for investors in [Weiss Korea] continue to be highly favourable. We are not aware of any market segment that is as undervalued as Korean preference shares.
"In the short run, markets are governed by the vagaries of investor whims. In the long run, prices generally reflect fundamental values. Long-run investors in Korean preference shares should have their patience rewarded."
Shares in Weiss Korea were untraded at 152.00 pence on Thursday.
Related Shares:
Weiss Korea Opp