The Asia Tigers Fund: A Conservative, Undervalued, And Discounted Closed-End Fund
Summary The Asia Tigers Fund provides diversified exposure to Asia with low valuation and a high discount. The fund’s P/E is currently 10.18, and it is trading at an 11.49% discount. The perpetual drop in the fund’s price since 2011 has resulted in low valuation. In a lot of cases, I prefer closed-end funds due to their relatively low valuation, and for the fact that they are often trading at a discount. Other closed-end funds that I recommend include the Aberdeen Indonesia Fund, VinaCapital Vietnam Opportunity Fund, and Vietnam Holding Ltd. The Asian Tigers Fund (NYSE: GRR ) is a closed-end fund that is managed by Aberdeen Asset Management. The fund’s incredibly low valuation and high discount is what initially made me interested in this fund. The fund’s P/E is currently 10.18 , and it is trading at an 11.49% discount . The advisor fee for the fund is 1% and the total expense ratio is 2.8%. A value-based comparison of other ETFs that invest in Asia clearly proves that this fund is superior. Market Vectors Vietnam ETF (NYSEARCA: VNM ): P/E is 16. iShares MSCI Hong Kong ETF (NYSEARCA: EWH ): P/E is 16 iShares MSCI Singapore ETF (NYSEARCA: EWS ): P/E is 13 . iShares MSCI India ETF (BATS: INDA ): P/E is 20 . iShares MSCI Philippines ETF (NYSEARCA: EPHE ): P/E is 19 . iShares Asia 50 (NYSEARCA: AIA ): P/E is 12 . Diversified Approach The fund’s geographical exposure to Asia is extremely diverse , providing exposure to the following countries: Hong Kong: 25.6% Singapore: 20.5% India: 16.4% China: 8.8% Taiwan: 6.3% South Korea: 5.2% Thailand: 4.5% Philippines: 3.5% Malaysia: 3.3% Indonesia: 1.1% The fund’s small allocation towards China is comforting, as well as the fact that 62.5% of its assets are invested in Hong Kong, Singapore, and India. The industry approach is also extremely diverse, although around 56% of the fund’s assets are invested in the financial services and information technology industries. The top 10 fund holdings make up 43.3% of the fund’s total assets, further edifying the fund’s strategic and diversified exposure to Asia. Annual Returns 2012 2013 2014 YTD Asia Tiger Fund (Price) 27.13 -8.13 3.42 -3.39 Asia Tiger Fund (NAV) 23.53 -5.05 3.27 -0.40 Pacific/Asia Ex. Japan Stock (Price) 25.33 -7.19 3.40 -0.68 Pacific/Asia Ex. Japan Stock (NAV) 25.40 -4.33 3.99 1.32 Source: Morning Star Overall, there have been no major discrepancies between the performance of the Asia Tigers Fund and its benchmark. Apart from 2012, performance of the fund has not been substantial. I am optimistic about the fund due to its diverse country, company, and industry approach, as well as its low valuation and high discount. For these reasons, it stands out as the one of the most conservative options for value investors to gain diversified exposure to the growth of Asia. GRR data by YCharts The perpetual drop in the fund’s price since 2011 has resulted in low valuation. Other Closed-End Funds In a lot of cases, I prefer closed-end funds due to their relatively low valuation, and for the fact that they are often trading at a discount. Some other closed-end funds that I have come across also provide similar valuation and discount for investors, and offer the opportunity for investors to gain access to a single country. I will also list three closed-end investment funds in Indonesia and Vietnam that I have previously written about, in order to provide a holistic view of what options there are for discounted closed-end funds in Asia. Aberdeen Indonesia Fund (NYSEMKT: IF ): The fund’s P/E is 7.21 and it trades at a 12.28% discount . I remain optimistic about this fund, despite the exchange rate movement risk. VinaCapital’s Vietnam Opportunity Fund ( OTCPK:VCVOF ): This fund’s P/E is 10.83 and it trades at an 18.35% discount . Vietnam Holding Ltd. ( OTC:VNMHF ): The fund’s P/E is 5.65 and it trades at a 14.06% discount . The liquidity risk should be noted, as its average 3-month trading volume has been 905. The Asia Tiger Fund is an appropriate fund for investors who prefer diversified exposure to Asia and have reservations about specific countries like Vietnam or Indonesia. Regardless of varying investment objectives, I am a proponent of investing in deeply discounted closed-end funds that provide exposure to Asia’s growth. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.