This fund has made up around 8-10% of the holdings for Model Beta for the last few years. In its review it has not performed as expected during this time frame. The following observations are made:

  1. The country and currency allocation are Japan and Korea making up 46% in each. This poses a significant risk as I have bearish views on Korea and Japan. I am also bearish on both their currencies although I am currently bearish on the US Dollar at time of writing. Both equities and currencies are always in play (Fig. 1).
  2. Mainfreight Ltd (NZ) [MFT] (Fig. 1) is the top holding at 7.9%. It’s stock price action has been stellar (Fig. 2) yet this is not reflected in the performance of the fund which is only about +2% in 2016.
  3. Tracking this Fund on my spreadsheet (Fig. 3):
    • We started contributing to this fund on 2014-11-03 at 10% on a monthly basis.
    • The average purchase price is $96.80
    • The average exit price is $100.91 (2017-02-20)
    • Which yields a return of +4.24%
  4. The mismatch between Mainfreight Ltd and this fund’s performance is quite evident.  During this time the currencies have also depreciated.
Fig. 1 - 2016-12-31 Allianz Oriental Income Fund Details (Source: Allianz.com)

Fig. 1 – 2016-12-31 Allianz Oriental Income Fund Details (Source: Allianz.com)

 

Fig. 2 - Mainfreight Limited Price action (Source: TradingView.com)

Fig. 2 – Mainfreight Limited Price action (Source: TradingView.com)

 

Fig. 3 - Oriental Income Performance

Fig. 3 – Allianz Oriental Income Performance at Portfolio Level

 

 

Conclusion

Now is a good time to switch out of this fund, into other possible up and coming sectors such as Indonesia.

2017-02-20 Switching Model Beta details this switching.

 

Best,
Michael