South Korea-focused Weiss Korea Opportunity Fund (WKOF:AIM) today reported a positive first-half performance that handily beat its benchmark, though shares in the under-the-radar trust were unchanged at 185p.
Weiss Korea Opportunity Fund also remarked that the uncertainty and price volatility engendered by the pandemic could provide ‘WKOF’ with ‘exceptional trading and investment opportunities’.
BEATING THE BENCHMARK
Managed by Boston-based Weiss Asset Management, shares in the trust have rallied almost 80% from 103.5p in March to 185p. During the six months to June 2020, the fund’s net asset value (NAV) gained 11.3% (including reinvested dividends), thereby comfortably outperforming the 1.7% fall in the MSCI Korea 25/50 Net Total Return Index in pounds.
Since making its AIM debut in May 2013, Weiss Korea Opportunity’s NAV has actually increased by 96.7% including reinvested dividends, which compares very favourably to the 42.9% return from the Korea Index.
DEALING WITH DISRUPTION
In today’s update, chairman Norman Crighton explained: ‘Compared to many, the Korean government and people have done a good job of containing the virus. However, South Korea entered a technical recession at the end of the second quarter and cluster-based virus outbreaks continue to emerge.
‘Until a vaccine is found, and is effectively distributed, we anticipate continued Covid-19 disruption to the South Korean economy and financial markets.’
Yet where there is a problem, there is an opportunity. As Weiss Asset Management concluded: ‘Financial markets, as well as life in general, were profoundly impacted by the emergence of Covid-19 during the first half of 2020. As nations and companies re-evaluate their priorities in light of the pandemic, some themes that have been beneficial to WKOF, such as corporate governance reforms, will likely be temporarily de-prioritized.
‘At the same time, uncertainty and price volatility may provide WKOF with exceptional trading and investment opportunities.’
More specialised trusts tend to charge higher fees and investors should note the relatively high 1.87% expense ratio of the trust.
