Interim Management Statement
Advance Developing Markets Fund Limited ("the Company")
Interim Management Statement
For the period from 1 November 2010 to 28 February 2011
This interim statement covers the period from 1 November 2010 to 28 February 2011. It is the first interim management statement issued by the Company in its financial year to 31 October 2011, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.
Investment objective and policy
The Company's objective is to achieve consistent returns for shareholders in excess of the S&P/IFCI Emerging Markets Composite Index in Sterling terms (the "Benchmark"). Advance Emerging Capital Limited (the "Manager") invests in a portfolio of funds and products which give diversified exposure to global emerging markets. The Company's geographic asset allocation is derived from the Investment Manager's analysis of the prospects for regions and countries and of the underlying opportunities for investment. Individual investments are selected for their potential to outperform as a result of one or more of the following criteria: the performance of the region, market or asset class in which they invest; the skill of the underlying fund manager; and, in the case of closed end funds, through the narrowing of discounts at which their shares trade to net asset value. The Manager may employ hedging mechanisms where it believes that this would protect the performance of the Company's investment portfolio in a cost effective manner.
Benchmark
S&P/IFCI Emerging Markets Composite Index (£ Price Return)
Highlights
During the period from 1 November 2010 to 28 February 2011:
* Undiluted Net Asset Value ("NAV") per ordinary share ("Share") fell by 2.6%
* Share price fell by 1.0%
* S&P/IFC Composite Index (sterling adjusted) fell by 0.9%
* Undiluted NAV per Share 540.1p as at 28 February 2011
* Diluted NAV per Share 408.7p as at 28 February 2011
* Share price 463.0p as at 28 February 2011
* Net assets £368.8m as at 28 February 2011
Gearing
Gearing is not used as a tool to enhance performance but short term borrowing is permitted to assist in the management of liquidity.
Material transactions and events
On the subscription date of 29 October 2010 a total of 2,350,604 Subscription Shares were exercised. These shares were admitted to the Official List on 9 November 2010. There are currently 68,290,851 Ordinary Shares and 9,830,153 Subscription Shares in issue.
The Board of Directors is not aware of any other significant events or transactions that have occurred between 1 November 2010 and the date of this interim management statement that would have a material impact on the financial position or performance of the Company.
Manager's Comment
Global emerging markets rose by close to 9% in the first two months of the period before concerns over inflation, credit growth and political developments in North Africa contributed to a weakening of investor sentiment in January and February.
The underperformance of Company's NAV of the benchmark during the period was largely attributable to the dilution that resulted from the Subscription Share exercise at the end of October 2010. The Manager estimates that the exercise of 2.35 million Subscription Shares detracted around 1.6% from headline NAV performance in the first month of the period.
Global emerging markets continue to offer superior growth at reasonable valuations. A global environment of "lower for longer" interest rates and only moderate tightening in emerging markets themselves despite rising inflationary pressures should prove conducive to continued outperformance in both relative and absolute terms whilst also increasing the asset class' relevance within global portfolios. An increase in global risk aversion as a result of further financial stress in developed markets, political uncertainties in the Middle East North Africa region or a rapid uptick in inflation appear to be the biggest risks to this outlook.
|
Top 10 Holdings at 28 February 2011 |
% of NAV |
|
Atlantis China Fund |
7.5% |
|
JP Morgan Russian Securities |
5.7% |
|
BlackRock Latin American IT |
5.3% |
|
Taiwan Fund Inc |
5.0% |
|
Henderson TR Pacific IT |
4.7% |
|
Baring Emerging Europe IT |
4.1% |
|
Aberdeen Latin America Equity |
4.0% |
|
Tarpon All Equities Fund |
3.8% |
|
Korea Fund Inc |
3.7% |
|
Advance Brazil Leblon Equity Fund |
3.6% |
14 March 2011
Enquiries:
Advance Emerging Capital Limited (Investment Manager to Advance Developing
Markets Fund Limited)
Roger Allen
Tel: +44 (0)20 7016 0030 Email: rallen@advance-emerging.com
This information is provided by RNS