CONFIDENTIAL AFC Asia Frontier Fund
September 2013
AFC Asia Frontier Fund
June 2016
2
INTRODUCING ASIA FRONTIER CAPITAL
AFC Asia Frontier Fund
3
Proven Expertise In Frontier Markets • Asia Frontier Capital Limited was created in June 2013 through a Management Buy Out from Leopard Capital • The founder and CEO, Thomas Hugger, has more than 20 years experience in investing in Frontier Markets • Licensed by SFC Hong Kong for Type 4 (advising on securities) and Type 9 (asset management)
Asia Frontier Capital Offers Three Funds • AFC Asia Frontier Fund – Launched 31st March 2012 • AFC Vietnam Fund – Launched 23rd December 2013 • AFC Iraq Fund – Launched 26th June 2015
Attractive Equities Identified in Structured Investment Policy • Asia Frontier Capital has identified equities with good upside potential • The Fund has access to numerous primary and secondary research sources • A Structured Investment and Research process is being followed
AFC Asia Frontier Fund
INTRODUCING ASIA FRONTIER CAPITAL
Our Team
Thomas Hugger, CEO and Fund Manager, has spent 27 years in private banking and has been investing in Asian and African Frontier Markets since 1993. He is the former Managing Partner, CFO & COO of Leopard Capital; and was previously a Managing Director and Head of Portfolio Management at LGT Bank in Hong Kong. Mr. Hugger was the founding shareholder of one of the largest brokerage companies in Bangladesh. He is also a Certified Financial Investment Analyst (CFIA) and Investment Adviser (Switzerland) and a Certified European Federation of Financial Analysts Societies (EFFAS) Financial Analyst.
Ahmed Tabaqchali, CIO of Iraq Investments, is an experienced capital markets professional with over 22 years of experience in MENA markets as well as the US. He is currently a board member of the Credit Bank of Iraq and former Executive Director of NBK Capital, the investment banking arm of the National Bank of Kuwait. Prior to these roles Ahmed was Managing Director and Head of International Institutional Sales at WR Hambrecht + Co. This followed on from roles as a Managing Director at KeyBanc Capital Markets and Director & Head of Capital Markets & Institutional Sales at Jefferies Int'l in London. Ahmed is an Iraqi as well as British national and holds a M.Sc. in Mathematics from Oxford University in England, a B.Sc. (Hons, 1st class) in Mathematics from Victoria University and a B.Sc. in Mathematics from Canterbury University in New Zealand.
Ruchir Desai, CFA, Senior Investment Analyst, is an MBA graduate in Finance from CUHK Business School at The Chinese University of Hong Kong and is also an alumnus of The Fuqua School of Business at Duke University where he spent a semester during his MBA program. He is also a Chartered Financial Analyst (CFA) charter holder. Prior to being based in Hong Kong, Ruchir was based in Mumbai where he spent two years as a Senior Analyst at HandsOn Ventures LLC, a mid-market private equity group focused on investments in the Business Services industry. Prior to this role, he spent three years as a Research Analyst at Pioneer Investcorp Ltd, an institutional brokerage based in Mumbai.
Peter de Vries, Marketing Director, has over 25 years experience in finance of which 20 in Hong Kong. He is a former Director and Senior Relationship Manager at Leopard Capital. Prior to that he was an Executive Vice President at Upbest Financial Services where he was involved with fund raising and deal structuring for real estate investment and development projects in Macau. Previously he worked as Executive Vice President at ViewTrade Securities in Hong Kong as head of the business development for the Asia Pacific region. Mr. De Vries has also held the position of Assistant Vice President at Merrill Lynch Asia Pacific. He holds an MBA in finance from Calstate Hayward, and a Masters of Science in Electrical Engineering from Twente University in the Netherlands. Mr. De Vries is fluent in Dutch, English and German.
Scott Osheroff, Regional Research Analyst, holds a Bachelor’s Degree in Business Administration with a Concentration in Finance from Northeastern University. Prior to joining Asia Frontier Capital, Scott worked with Pathfinder Capital Management in Southeast Asia and Mongolia. Prior to this role, Scott co-founded a publishing company whose principal asset, EmergingFrontiers.com, was leveraged to provide investment coverage on public and private investments in Asia’s frontier markets. He has spent the last two years between Mongolia and Cambodia.
Ms. Margaret Kwok, Accounting & Administration Executive, has over 30 years of prior work experience in accounting, administration, and financial services at institutions such as Christfund Securities, PFC International, and Guoyuan Securities. She holds advanced level certificates in Accounting & Costing from London Chamber of Commerce & Industry and a Certificate in Accountancy from Kwai Chung Technical Institute. Margaret is fluent in Cantonese, Mandarin and English.
4 AFC Asia Frontier Fund
OUR TEAM
Our Team
Thomas Hugger, CEO and Fund Manager, has spent 27 years in private banking and has been investing in Asian and African Frontier Markets since 1993. He is the former Managing Partner, CFO & COO of Leopard Capital; and was previously a Managing Director and Head of Portfolio Management at LGT Bank in Hong Kong. Mr. Hugger was the founding shareholder of one of the largest brokerage companies in Bangladesh. He is also a Certified Financial Investment Analyst (CFIA) and Investment Adviser (Switzerland) and a Certified European Federation of Financial Analysts Societies (EFFAS) Financial Analyst.
Hon. Andrew Fraser, Director, is a graduate of St John's College, Oxford after which he held numerous posts in the financial sector both in the City of London and elsewhere. He has previously held positions as; CEO of Baring Securities in the UK, Chairman of Equity Partners Ltd., a Bangladesh investment bank, as well as Chairman of Bridge Securities, a quoted Korean company, amongst other posts. At present he is a global investor based in London.
Dr. Marc Faber, is CEO, investment advisor
and fund manager of Marc Faber Limited. He
is the publisher of a widely read monthly
investment newsletter The Gloom, Boom
and Doom report which highlights global
investment opportunities. Dr. Faber is
respected around the world for his market
forecasts over the past three decades.
5 AFC Asia Frontier Fund
SHAREHOLDERS OF ASIA FRONTIER CAPITAL LIMITED
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WHY ASIAN FRONTIER MARKETS?
AFC Asia Frontier Fund
7
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
AFC Asia Frontier Fund Universe
Bangladesh
Cambodia
Iraq
Laos
Maldives
Mongolia
Myanmar
Pakistan
Papua New Guinea
Sri Lanka
Vietnam
8
Excellent upside potential due to high GDP growth
Low Correlation and Diversification at
attractive Valuations
Increasing Consumption
Favourable Demographics
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Manufacturing shift from China
9
Diversification has led to Low Correlations for the Fund with Global Markets
AFC Asia Frontier Fund
Source: Bloomberg, Asia Frontier Capital. Correlations based on Monthly Returns and Gross Fund Returns AAFF – AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Correlation of AAFF with MSCI Indexes since Inception (30th March 2012)
Variable AAFF MSCI World
Index MSCI Emerging Markets Index
MSCI BRIC Index
MSCI Frontier Markets Index
MSCI World Index 0.34 1.00
MSCI Emerging Markets Index 0.30 0.79 1.00
MSCI BRIC Index 0.33 0.77 0.98 1.00
MSCI Frontier Markets Index 0.62 0.64 0.59 0.59 1.00
MSCI Frontier Markets Asia Index 0.81 0.41 0.33 0.33 0.66
Correlation of AAFF with MSCI Indexes since May 2013 - Start of Fed Taper Fear
MSCI World Index 0.14 1.00
MSCI Emerging Markets Index 0.11 0.78 1.00
MSCI BRIC Index 0.13 0.76 0.98 1.00
MCSI Frontier Markets Index 0.54 0.59 0.56 0.54 1.00
MSCI Frontier Markets Asia Index 0.80 0.34 0.24 0.25 0.64
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Low Correlations for the Fund with Global Markets has led to excellent Risk-Return profile
Annualised Volatility vs. Gross Return (Since Inception, March 2012)
AFC Asia Frontier Fund
Source: Bloomberg. *Correlations based on Monthly Returns and Gross Fund Returns AAFF – AFC Asia Frontier Fund
Annualised Volatility
Cumulative Returns*
AAFF 9.47% 81.88%
MSCI World Index 11.71% 27.64%
MSCI Frontier Markets Index
11.99% 4.61%
MSCI Frontier Markets Asia Index
14.86% 5.09%
MSCI Emerging Market Index
16.08% -22.47%
MSCI BRIC Index 19.71% -27.16%
WHY ASIAN FRONTIER MARKETS
AFC Asia Frontier Fund USD A
MSCI World
MSCI Emerging Markets MSCI BRIC
MSCI Frontier Markets MSCI Frontier Markets
Asia
-30%
-10%
10%
30%
50%
70%
90%
0% 5% 10% 15% 20% 25%
Gro
ss R
etu
rn
Annualised Volatility
Annualised Volatility vs. Gross Return (Since Inception, March 2012)
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Low Correlation to Global Markets
Asian Frontier markets are under researched and have the potential to provide
returns with low correlations to global markets
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Source: Bloomberg. *Based on 5 years monthly data
-0.05 -0.01
0.10
0.28 0.28 0.33
0.36
0.51
0.59
-0.2
0.0
0.2
0.4
0.6
0.8Correlation with the MSCI World Index ISXGI Index (Iraq)
DSE Broad Index (Bangladesh)
CSX Index (Cambodia)
MSE Top 20 Index (Mongolia)
LSXC Index (Laos)
KSE All Share Index (Pakistan)
Colombo All Share Index (SriLanka)VH Index (Vietnam - Hanoi)
VN Index (Vietnam - Ho Chi Minh)
12
Attractive Valuations
Asian Frontier markets offer attractive dividend yields and lower Price to Earnings and Price to Book ratios relative to emerging markets
Asian Frontier markets are valued attractively relative to emerging Asian countries
AFC Asia Frontier Fund
Source: Bloomberg. P/E is based on Trailing 12 Months and P/B is latest reporting period.
WHY ASIAN FRONTIER MARKETS
Select Asian Frontier Index Valuations
Country Index P/E (x) P/B (x) Dividend Yield (%)
Laos LSXC 7.5 1.1 4.5
Pakistan KSE100 10.3 1.8 5.5
Sri Lanka CSEALL Share 13.5 1.5 2.7
Vietnam VNINDEX 13.7 1.8 3.7
Emerging Asia Index Valuations
Country Index P/E (x) P/B (x) Dividend Yield (%)
Malaysia FBMKLCI 18.4 1.8 3.1 Thailand SET 19.8 1.9 3.3
India BSE SENSEX 20.3 2.9 1.5 Philippines PCOMP 22.7 2.6 1.7
Indonesia JCI 24.5 2.4 1.9
Source: Bloomberg. P/E is based on Trailing 12 Months and P/B is latest reporting period.
13 AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Low Market Cap/GDP relative to Emerging Markets Offers Value
Source: Bloomberg, Asia Frontier Capital
4% 8% 11%
27% 27% 34% 36% 39% 40% 41% 43% 46%
61% 62%
95% 100%
120%
0%
25%
50%
75%
100%
125%
150% Market Cap. as % of GDP - Asian Frontier v/s Emerging Markets
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Excellent upside potential due to high GDP growth
Low Correlation and Diversification at
attractive Valuations
Increasing Consumption
Favourable Demographics
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Manufacturing shift from China
15
High GDP Growth Rates (2015) in the AFC Frontier Universe
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Source: IMF
0%
2%
4%
6%
8%
10%
12%
Papua NewGuinea
Myanmar Lao P.D.R. Cambodia Bangladesh Sri Lanka Vietnam Pakistan Mongolia Maldives Iraq
5.9% Average
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The AFC Frontier Universe offers attractive investment opportunities as their combined GDP is comparable in size to emerging and developed countries
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Source: World Bank
GDP of AFC Frontier Universe: USD 912 billion (as of 2013)
26%
25% 19%
16%
7%
2%
2% 1% 1% 1% 0.003%
Pakistan
Iraq
Vietnam
Bangladesh
Sri Lanka
Papua New Guinea
Cambodia
Mongolia
Lao P.D.R.
Myanmar
Maldives0
200
400
600
800
1,000
1,200GDP (USD Billion)
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Excellent upside potential due to high GDP growth
Low Correlation and Diversification at
attractive Valuations
Increasing Consumption
Favourable Demographics
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Manufacturing shift from China
18 AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
The AFC Frontier Universe has a sizeable population which continues to grow and will support future GDP growth
AFC Frontier Universe Combined Population: 568 million (as of 2013)
Source: World Bank
0
200
400
600
800
1,000
1,200
1,400Population (millions)
32%
28%
16%
9%
6%
4%
3% 1% 1% 0.005 0.001
Pakistan
Bangladesh
Vietnam
Myanmar
Iraq
Sri Lanka
Cambodia
Papua New Guinea
Lao P.D.R.
Mongolia
Maldives
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Compared to Developed Markets, the AFC Frontier Universe has a much younger population growing at a faster rate: This supports future economic growth and consumption
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Source: United Nations Population Division.
AFC Frontier Universe – A Young and Growing Population
0%
20%
40%
60%
80%
AFC Universe NorthAmerica
NorthernEurope
WesternEurope
Japan
% of Population
< 30 Years Old
> 50 Years Old
24
37 40
42 45
-0.4%
0.0%
0.4%
0.8%
1.2%
1.6%
0
10
20
30
40
50
AFC Universe NorthAmerica
NorthernEurope
WesternEurope
Japan
Median Age & Population Growth
Median Age (LHS) Population Growth, 2015-2020 (RHS)
AFC Frontier Universe is supported by huge young population Developed Markets are not getting younger. AFC Frontier Universe offer young and growing population
20 AFC Asia Frontier Fund
Increasing urbanisation will support growth in the Consumer, Infrastructure and Financial sectors
WHY ASIAN FRONTIER MARKETS
The AFC Frontier Universe is Urbanising from a Low Base
Rural 20%
Urban 80%
OECD Members
Rural 65%
Urban 35%
AFC Frontier Universe
Source: World Bank
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Excellent upside potential due to high GDP growth
Low Correlation and Diversification at
attractive Valuations
Increasing Consumption
Favourable Demographics
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Manufacturing shift from China
22 AFC Asia Frontier Fund
Asian Frontier countries presently have similar demographics to what China had in the 1990s. By 2020 Asian Frontier countries will continue to have a young population relative to China
WHY ASIAN FRONTIER MARKETS
The Shift from China
Source: United Nations Population Division
Median Age – China in 1990 v/s Asian Frontier countries at present have similar median ages
% of Population > Age 60 – China v/s Asian Frontier countries in 2020 Asian Frontier countries’ younger population offer an
alternative to China
16.9% 15.5%
12.8%
10.5% 9.4%
8.1% 7.2% 6.6%
0%
5%
10%
15%
20% % of Population > Age 60 36
25
20 22 24 24
28 29 31
0
10
20
30
40Median Age
23 AFC Asia Frontier Fund
Combination of young workforce and low wages is attracting manufacturing activities to Asian frontier countries as wages in China increase and the workforce gets greater employment opportunities
WHY ASIAN FRONTIER MARKETS
The Shift from China
Source: China Statistical Bulletin, Wage Indicator Foundation, Bangladesh Garment Manufacturers & Exporters Association, General Statistics Office of Vietnam
0
150
300
450
600
750 Bangladesh RMG & Vietnam Export Growth*
Bangladesh
Vietnam
50 52 68 75 79
100 112
193
251 264 275 282
0
75
150
225
300
Monthly Minimum Wage (USD)
*Rebased to 100 (2003). RMG: Ready Made Garments
Wages in Asian Frontier countries are amongst the lowest in the region Bangladesh and Vietnam are good examples of the shift of
manufacturing from China to neighboring countries
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Excellent upside potential due to high GDP growth
Low Correlation and Diversification at
attractive Valuations
Increasing Consumption
Favourable Demographics
AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Manufacturing shift from China
25 AFC Asia Frontier Fund
Percentage of Durables in Private Consumption
AFC Asia Frontier Fund
Universe
Per capita income USD PPP (2012)
Bangladesh $ 729
Cambodia $ 792
Iraq $ 3,918
Laos $ 1,017
Maldives $ 4,385
Mongolia $ 2,499
Myanmar -
Pakistan $ 1,217
PNG $ 1,625
Sri Lanka $ 2,699
Vietnam $ 1,372
WHY ASIAN FRONTIER MARKETS
26 AFC Asia Frontier Fund
Consumption Expenditure is Increasing in Frontier Markets
0
1
2
3
4
5
6
7
8
9
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Household final consumption expenditure per capita growth (annual %)
BRICS Average Linear (BRICS Average)
-1
0
1
2
3
4
5
6
7
8
9
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Household final consumption expenditure per capita growth (annual %)
AFC Country Universe Average Linear (AFC Country Universe Average)
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Household final consumption expenditure per capita (USD - constant 2005) Bangladesh
Cambodia
Iraq
Lao PDR
Maldives
Mongolia
Myanmar
Pakistan
Papua NewGuineaSri Lanka
Vietnam
AFC Average
-2
-1
0
1
2
3
4
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Household final consumption expenditure per capita growth (annual %)
Developed Countries Linear (Developed Countries)
WHY ASIAN FRONTIER MARKETS
27 AFC Asia Frontier Fund
WHY ASIAN FRONTIER MARKETS
Remittance inflows continue to grow and will support domestic consumption and investment
Remittance Inflows supports GDP Growth
Source: World Bank
0
5
10
15
20
25
30
35
40
45
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bill
ion
USD
Personal remittances, received (Billion current USD) Vietnam
Sri Lanka
Papua New Guinea
Pakistan
Myanmar
Mongolia
Maldives
Lao PDR
Iraq
Cambodia
Bangladesh
28 AFC Asia Frontier Fund
Asian Frontier Consumer Stocks are undervalued and some companies have been catching up with Emerging Market valuations over the past year. This has helped generate alpha for the fund.
Asian Frontier Consumer Picks
Regional Comparisons
Source: Bloomberg. P/E based on Trailing 12 Month Earnings, P/B based on most recent reporting period.
Country Company P/E (x) P/B (x) Dividend Yield (%)
Mongolia Consumer Food Products 7.5 0.6 0.7
Sri Lanka Consumer Beverage Products 10.2 1.0 1.5
Vietnam Consumer Food Products 13.6 3.5 4.4
Pakistan Consumer Beverage Products 13.8 1.8 1.1
Bangladesh Shoe Retailer 22.7 6.2 2.8
Country Company P/E (x) P/B (x) Dividend Yield (%)
Thailand President Bakery 18.7 4.8 2.6
Indonesia Indofood Sukses Makmur 22.5 2.3 3.0
China Tsingtao Brewery 23.5 2.4 1.5
Philippines Universal Robina Corp 31.0 6.8 1.6
India Bata India 35.9 3.0 0.6
WHY ASIAN FRONTIER MARKETS
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INVESTMENT STRATEGY
AFC Asia Frontier Fund
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Top-down Approach
Value / Growth
Risk Mitigation
Cash
AFC Asia Frontier Fund
INVESTMENT STRATEGY
INVESTMENT STRATEGY – IDEA GENERATION PROCESS – COMBINATION OF BOTTOM UP-TOP
DOWN
31 AFC Asia Frontier Fund
Bottom-up stock shortlisting using tools
based on Valuation and Fundamental
parameters
Top-down stock shortlisting based on
economy and industry analysis
Access to Third Party Research (daily
updates, company specific research, industry research)
On the ground visits to countries to meet with
management of companies
Relationship with sell side analysts for views on company/industry
32 AFC Asia Frontier Fund
•Historical trend of growth, margins and cash from operations
• Focus on trend in RoEs and dividend payout ratios. Historical Financial Statement
Analysis
•Well established brand
• Large distribution network
•High Market Share
•Economies of Scale
•Cost Structure
• Stable Management
Competitive Advantages
• Is company operating in an industry with favorable outlook
•Example 1: Shoes per capita in Bangladesh is significantly lower than emerging market peers
•Example 2: Upswing in infrastructure spending in Pakistan positive for cement companies
Industry Outlook & Opportunity
• Conduct both local and regional peer analysis by comparing valuation, fundamental and industry metrics
Peer Comparison Analysis
INVESTMENT STRATEGY – RESEARCH PROCESS
INVESTMENT STRATEGY – WHAT WE LOOK FOR WHEN WE BUY
33 AFC Asia Frontier Fund
Possible Triggers: Introduction of new products, expansion plans, interest rate cycle on the downswing, decreasing debt
levels, improvement in macro environment
Room for expansion in multiples due to undervaluation relative to peers
Is future outlook consistent with past historical trend in growth, margins, cash flows, RoEs and dividend payout ratios.
Take a longer term view on the business and not get distracted by near term disappointments
INVESTMENT STRATEGY – WHAT WE LOOK FOR WHEN WE SELL
34 AFC Asia Frontier Fund
Deteriorating company fundamentals, poor industry outlook and/or deteriorating economic outlook
Are negatives already in the price?
Valuations move above our comfort zone on absolute and relative basis
Lack of confidence in company management
INVESTMENT STRATEGY – RISK MANAGMENT
35 AFC Asia Frontier Fund
Corporate Governance & Concentration Risk
• Accounting standards and disclosures not yet comparable to developed markets
• We look to mitigate this risk through our research process and meeting with company management and on the ground research
• To further mitigate the risk of governance issues impacting the overall portfolio the fund has maximum position limit of 5% in a holding with top slicing at 10% should the valuation rise.
Political Risk
• Certain markets could face unstable political and security environments
• We look to mitigate this risk by using a top down approach to increase/decrease country allocation based on political events that may impact our holdings
• Keeping track of the fundamentals of companies and the economy
• Diversification amongst markets that have political risks and cycles that are independent of each other
Currency Risk
• The fund does not hedge currency exposure as it is prohibitively expensive and at many times not logistically possible
• We look to mitigate this risk by using a top down approach to diversify across countries
• Keeping track of the fundamentals of the economy and macroeconomic developments
INVESTMENT STRATEGY – TOP 10 HOLDINGS
36 AFC Asia Frontier Fund
Current Top 10 Holdings Company Country Sector % of NAV Beximco
Pharmaceuticals Bangladesh Healthcare 6.6%
Searle Company Ltd. Pakistan Healthcare 5.0%
Kincora Copper Ltd. Mongolia Materials 3.6%
Cotec Construction Vietnam Industrials 3.1%
Binh Minh Plastics Vietnam Materials 3.1%
D.G. Khan Cement Pakistan Materials 2.8%
Bata Shoe Co. Bangladesh Consumer Discretionary 2.8%
Traphaco JSC Vietnam Healthcare 2.6%
Hai Duong Pump Manufacturing
Vietnam Industrials 2.4%
AFC Iraq Fund Iraq Fund/ETF 2.3%
37
FUND INFORMATION
AFC Asia Frontier Fund
Comparison of Frontier Funds (Citywire Global)
38 AFC Asia Frontier Fund
Rank Fund Manager Firm Fund 36 month total return
36 month maximum drawdown
36 month standard deviation
#1 Thomas Hugger Asia Frontier Capital
AFC Asia Frontier Fund USD A
+42.59% -5.7% 2.6%
#2 Thomas Vester BMO Global Asset Management
BMO LGM Frontier Markets B Acc
+33.48% -16.1% 3.1%
#3 Chris Turner & Andrew Brudenell
HSBC HSBC GIF Frontier Markets
+33.03% -17.7% 3.8%
#4 Allan Conway & Ramzi Sidani
Schroder Schroder ISF Frontier Markets Equity
+32.15% -28.0% 4.5%
#5 Tim Drinkall Morgan Stanley
Morgan Stanley Frontier Emerging Markets Equity
+30.13% -19.4% 3.6%
Citywire published an article on 26 November 2015 detailing the five top performing Frontier Markets Equity Managers. Note also the max. drawdown and standard deviation.
AWARDS
39 AFC Asia Frontier Fund
40 AFC Asia Frontier Fund
FUND STATISTICS – AFC ASIA FRONTIER FUND
NAV USD-A CHF-A EUR-A
NAV 1,440.99 1,527.98 1,356.76
Since Inception 44.10% 52.80% 35.68%
Inception Date 30/03/2012 30/03/2012 31/01/2014
Monthly Performances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 USD +0.91% −7.56% −0.27% −0.26% +0.85% +3.64% −0.96% +0.62% +3.62% +0.15%
2013 USD +5.99% −1.75% −0.70% +1.12% +8.25% −2.33% −0.54% −0.90% +0.06% −1.45% +0.86% +3.18% +11.83%
2014 USD +7.34% +1.67% +2.72% +1.53% +2.60% +0.07% +1.59% −0.05% +2.10% +2.52% −0.15% −0.62% +23.24%
2015 USD −0.49% −0.33% −4.16% +3.28% −0.32% +3.24% +1.09% −1.43% −1.42% +2.14% −3.42% +2.97% +0.80%
2016 USD −3.51% −0.77% +1.89% +2.30% +3.79% +3.58%
2012 CHF −0.29% −1.18% −2.62% +1.62% −1.40% +1.92% −1.82% +0.24% +2.26% −1.39%
2013 CHF +5.65% +0.84% +0.62% −0.96% +11.36% −3.46% −2.54% −0.52% −2.64% −1.20% +0.78% +1.60% +8.97%
2014 CHF +9.64% −1.12% +3.22% +1.05% +4.19% −0.76% +3.89% +0.92% +5.82% +3.35% +0.09% +2.08% +36.98%
2015 CHF −7.83% +3.33% −2.36% −0.80% +0.19% +2.38% +4.39% −1.23% −0.21% +2.98% +0.94% +0.01% +1.20%
2016 CHF −0.85% −3.33% −2.24% +2.20% +7.13% +2.58%
2014 EUR −3.62% +2.81% +0.86% +3.69% −0.33% +3.50% +1.76% +5.69% +3.24% +0.38% +2.02% +21.56%
2015 EUR +6.07% +0.46% +0.78% −1.80% +1.88% +1.11% +2.24% −3.04% −0.73% +3.11% +1.12% −0.45% +10.96%
2016 EUR −2.57% −1.06% −3.06% +1.40% +6.16% +0.59%
AFC Asia Frontier Fund Class A – as at 31st May 2016
41 AFC Asia Frontier Fund
FUND STATISTICS – AFC ASIA FRONTIER FUND
Monthly Performances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 USD +0.94% −7.55% −0.24% −0.23% +0.88% +3.67% −0.94% +0.64% +3.65% +0.37%
2013 USD +6.09% −1.77% −0.70% +1.17% +8.45% −2.36% −0.52% −0.87% +0.09% −1.43% +0.89% +3.19% +12.30%
2014 USD +7.53% +1.72% +2.79% +1.58% +2.67% +0.09% +1.65% −0.03% +2.16% +2.59% −0.13% −0.62% +24.07%
2015 USD −0.47% −0.31% −4.13% +3.31% −0.30% +3.27% +1.12% −1.41% −1.40% +2.16% −3.39% +2.99% +1.10%
2016 USD −3.49% −0.75% +1.91% +2.32% +3.82% +3.71%
2014 CHF −1.23% +3.42% +1.10% +4.30% −0.76% +4.00% +0.95% +5.97% +3.44% +0.11% +2.14% +25.78%
2015 CHF −7.81% +3.35% −2.34% −0.77% +0.21% +2.41% +4.41% −1.21% −0.18% +3.01% +0.96% +0.03% +1.51%
2016 CHF −0.83% −3.31% −2.22% +2.22% +7.15% +2.70%
2014 EUR +1.82% +5.82% +3.33% +0.40% +2.08% +14.10%
2015 EUR +6.22% +0.49% +0.81% −1.78% +1.91% +1.15% +2.31% −3.06% −0.71% +3.14% +1.17% −0.44% +11.46%
2016 EUR −2.55% −1.03% −3.04% +1.43% +6.18% +0.71%
NAV USD-B CHF-B EUR-B
NAV 1,466.20 1,311.22 1,280.88
Since Inception 46.62% 31.12% 28.09%
Inception Date 30/03/2012 31/01/2014 31/07/2014
AFC Asia Frontier Fund Class B – as at 31st May 2016
42 AFC Asia Frontier Fund
FUND STATISTICS – AFC ASIA FRONTIER FUND (NON – US)
NAV USD-A CHF-A EUR-A
NAV 1,440.89 1,527.98 1,356.76
Since Inception 44.09% 52.80% 35.68%
Inception Date 30/03/12 30/03/12 31/01/14
AFC Asia Frontier Fund (non-US) Class A – as at 31st May 2016
Monthly Performances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 USD +0.90% −7.56% −0.27% −0.26% +0.85% +3.64% −0.96% +0.61% +3.62% +0.14%
2013 USD +5.99% −1.75% −0.70% +1.12% +8.25% −2.33% −0.54% −0.90% +0.06% −1.45% +0.86% +3.18% +11.83%
2014 USD +7.34% +1.67% +2.72% +1.53% +2.60% +0.07% +1.59% −0.05% +2.10% +2.52% −0.15% −0.62% +23.24%
2015 USD −0.49% −0.34% −4.15% +3.28% −0.32% +3.24% +1.09% −1.43% −1.42% +2.14% −3.42% +2.96% +0.79%
2016 USD −3.51% −0.77% +1.89% +2.30% +3.80% +3.59%
2012 CHF −0.29% −1.18% −2.62% +1.62% −1.40% +1.92% −1.82% +0.24% +2.26% −1.39%
2013 CHF +5.65% +0.84% +0.62% −0.96% +11.36% −3.46% −2.54% −0.52% −2.64% −1.20% +0.78% +1.60% +8.97%
2014 CHF +9.64% −1.12% +3.22% +1.05% +4.19% −0.76% +3.89% +0.92% +5.82% +3.35% +0.09% +2.08% +36.98%
2015 CHF −7.83% +3.33% −2.36% −0.80% +0.19% +2.38% +4.39% −1.23% −0.21% +2.98% +0.94% +0.01% +1.20%
2016 CHF −0.85% −3.33% −2.24% +2.20% +7.13% +2.58%
2014 EUR −3.62% +2.81% +0.86% +3.69% −0.33% +3.50% +1.76% +5.69% +3.24% +0.38% +2.02% +21.56%
2015 EUR +6.07% +0.46% +0.78% −1.80% +1.88% +1.11% +2.24% −3.04% −0.73% +3.11% +1.12% −0.45% +10.96%
2016 EUR −2.57% −1.06% −3.06% +1.40% +6.16% +0.59%
43 AFC Asia Frontier Fund
NAV USD-B CHF-B EUR-B
NAV 1,466.08 1,311.22 1,280.88
Since Inception 46.61% 31.12% 28.09%
Inception Date 30/03/12 31/01/14 31/07/14
FUND STATISTICS – AFC ASIA FRONTIER FUND (NON – US)
AFC Asia Frontier Fund (non-US) Class B – as at 31st May 2016
Monthly Performances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 USD +0.94% −7.55% −0.24% −0.23% +0.88% +3.67% −0.94% +0.64% +3.65% +0.36%
2013 USD +6.09% −1.77% −0.70% +1.17% +8.45% −2.36% −0.52% −0.87% +0.09% −1.43% +0.89% +3.19% +12.29%
2014 USD +7.53% +1.72% +2.79% +1.58% +2.67% +0.09% +1.65% −0.03% +2.16% +2.59% −0.13% −0.62% +24.07%
2015 USD −0.47% −0.31% −4.13% +3.31% −0.30% +3.27% +1.12% −1.41% −1.40% +2.16% −3.39% +2.99% +1.09%
2016 USD −3.49% −0.75% +1.91% +2.32% +3.83% +3.71%
2014 CHF −1.23% +3.42% +1.10% +4.30% −0.76% +4.00% +0.95% +5.97% +3.44% +0.11% +2.14% +25.78%
2015 CHF −7.81% +3.35% −2.34% −0.77% +0.21% +2.41% +4.42% −1.21% −0.18% +3.01% +0.96% +0.03% +1.51%
2016 CHF −0.83% −3.31% −2.22% +2.22% +7.15% +2.70%
2014 EUR +1.82% +5.82% +3.33% +0.40% +2.08% +14.10%
2015 EUR +6.22% +0.49% +0.81% −1.78% +1.91% +1.15% +2.31% −3.06% −0.71% +3.14% +1.17% −0.44% +11.46%
2016 EUR −2.55% −1.03% -3.04% +1.43% +6.18% +0.71%
44 AFC Asia Frontier Fund
FUND STATISTICS
* All MSCI Index numbers and performance comparisons are versus the respective price index calculations
900
940
980
1,020
1,060
1,100
1,140
1,180
1,220
1,260
1,300
1,340
1,380
1,420
1,460
1,500M
ar 1
2A
pr
12
May
12
Jun
12
Jul 1
2A
ug
12
Sep
12
Oct
12
No
v 1
2D
ec 1
2Ja
n 1
3Fe
b 1
3M
ar 1
3A
pr
13M
ay 1
3Ju
n 1
3Ju
l 13
Au
g 1
3Se
p 1
3O
ct 1
3N
ov
13
Dec
13
Jan
14
Feb
14
Mar
14
Ap
r 1
4M
ay 1
4Ju
n 1
4Ju
l 14
Au
g 1
4Se
p 1
4O
ct 1
4N
ov
14
Dec
14
Jan
15
Feb
15
Mar
15
Ap
r 1
5M
ay 1
5Ju
n 1
5Ju
l 15
Au
g 1
5Se
p 1
5O
ct 1
5N
ov
15
Dec
15
Jan
16
Feb
16
Mar
16
Ap
r 1
6M
ay 1
6
Fund Performance - USD Class A (Net)
MSCI Frontier Markets Asia Index AFC Asia Frontier Fund (Net)
45 AFC Asia Frontier Fund
FUND STATISTICS
* All MSCI Index numbers and performance comparisons are versus the respective price index calculations
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900M
ar 1
2A
pr
12
May
12
Jun
12
Jul 1
2A
ug
12
Sep
12
Oct
12
No
v 1
2D
ec 1
2Ja
n 1
3Fe
b 1
3M
ar 1
3A
pr
13
May
13
Jun
13
Jul 1
3A
ug
13
Sep
13
Oct
13
No
v 1
3D
ec 1
3Ja
n 1
4Fe
b 1
4M
ar 1
4A
pr
14
May
14
Jun
14
Jul 1
4A
ug
14
Sep
14
Oct
14
No
v 1
4D
ec 1
4Ja
n 1
5Fe
b 1
5M
ar 1
5A
pr
15
May
15
Jun
15
Jul 1
5A
ug
15
Sep
15
Oct
15
No
v 1
5D
ec 1
5Ja
n 1
6Fe
b 1
6M
ar 1
6A
pr
16
May
16
Fund Performance – USD Class A (Gross)
MSCI Frontier Markets Asia Index AFC Asia Frontier Fund (Gross)
46 AFC Asia Frontier Fund
Growth in Fund Size and Number of Clients
FUND STATISTICS
0
20
40
60
80
100
120
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000M
ar 1
2
May
12
Jul 1
2
Sep
12
No
v 1
2
Jan
13
Mar
13
May
13
Jul 1
3
Sep
13
No
v 1
3
Jan
14
Mar
14
May
14
Jul 1
4
Sep
14
No
v 1
4
Jan
15
Mar
15
May
15
Jul 1
5
Sep
15
No
v 1
5
Jan
16
Mar
16
May
16
Nu
mb
er
of
Clie
nts
Fun
d S
ize
(U
S$'0
00
)
Private Clients (Right Axis) Institutional Clients (Right Axis) Fund Size (US$'000) (Left Axis)
47 AFC Asia Frontier Fund
COUNTRY ALLOCATION
30.2%
20.4%
15.6%
10.5%
6.1% 3.6%
2.3% 1.9% 1.6% 1.2% 0.3%
6.3%
0%
5%
10%
15%
20%
25%
30%
35%
Country Allocation – 31st May 2016
48 AFC Asia Frontier Fund
SECTOR ALLOCATION
18.7% 17.9% 17.1%
16.4%
10.0%
5.7%
2.3% 1.6% 1.6% 1.4% 1.0%
6.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Sector Allocation – 31st May 2016
49
Investment Manager: Asia Frontier Capital Ltd., Cayman Islands
Investment Advisor: Asia Frontier Investments Ltd., Hong Kong
Fund Base Currencies: USD, EUR, CHF
Subscription Frequency: Monthly, 5 business days before end of month
Redemption: Monthly:
- 90 days prior notice for class A shares
- 180 days prior notice for class B shares
Management Fee: 1.8% p.a. of NAV for class A shares
1.5% p.a. of NAV for class B shares
Performance Fee: 10% NAV appreciation above 3 month USD-LIBOR +2% and high water mark for class A shares
8% NAV appreciation above 3 month USD-LIBOR +2% and high water mark for class B shares
Initial Minimum Investment: USD/EUR/CHF 50,000 for US Investors
USD/EUR/CHF 25,000 for non-US Investors
FUND TERMS & CONDITIONS
AFC Asia Frontier Fund
50
Subsequent Minimum Subscription: USD 10,000 for USD shares
EUR 10,000 for EUR shares
CHF 10,000 for CHF shares
Subsequent Subscription Price: NAV
Country/Region Focus: Asia Frontier Markets
Initial Launch Date: 30 March 2012
Valuation Day: Last day of each calendar month
Main Custodian Banks: Deutsche Bank, Singapore / DBS, Hong Kong
Auditor: Ernst & Young, Hong Kong
Administrator: Custom House, Singapore
Legal Advisor: Cayman Islands: Ogier, Hong Kong
US: Morgan, Lewis & Bockius LLP, Boston
AFC Asia Frontier Fund
FUND TERMS & CONDITIONS
51
ASIA FRONTIER CAPITAL LTD. Thomas Hugger, CEO and Fund Manager, Hong Kong Email: [email protected] Tel: +852 3904 1015, Fax: +852 3904 1017 Peter de Vries, Marketing Director, Hong Kong Email: [email protected] Tel: +852 3904 1079, Fax: +852 3904 1017 Website: www.asiafrontiercapital.com
AFC Asia Frontier Fund
CONTACT INFORMATION
Asia Frontier Investments Limited is licensed by SFC Hong Kong for Type 4 (advising on securities) and Type 9 (asset management) *The representative of the Fund in Switzerland is Hugo Fund Services SA, 6 Cours de Rive, 1204 Geneva. The distribution of Shares in Switzerland must exclusively be made to qualified investors. The place of performance and jurisdiction for Shares in the Fund distributed in Switzerland are at the registered office of the Representative.
This Presentation is presented solely for purposes of discussion to assist prospective investors in determining whether they have a preliminary interest in the investment opportunity described herein. Under no
circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy, any security or other interest in AFC Asia Frontier Fund, AFC Umbrella Fund or any other fund related thereto (the
“Fund”). Offers and sales of interests in the Fund will not be registered under the laws of any jurisdiction and will be made solely to qualified investors under all applicable laws. Potential investors must read the entire
Offering Memorandum delivered by the Fund and the disclosure in this Subscription Agreement. Nothing contained herein shall be deemed to be binding against, or to create any obligations or commitment on the
part of, any potential investor or the Asia Frontier Capital (the “Fund Sponsors”). The Fund Sponsors reserve the right, in their sole and absolute discretion with or without notice, to alter the terms or conditions of this
Presentation and the Fund and/or to alter or terminate the potential investment opportunity described herein. Potential investors are not to construe this Presentation as investment, legal or tax advice. Prior to
making any potential investment, potential investors should consult with their own legal, investment, accounting, regulatory, tax and other advisors to determine the consequences of the potential investment
opportunity described herein and to arrive at an independent evaluation of such potential investment opportunity.
By accepting this Presentation, the recipient agrees not to copy, distribute, discuss or otherwise disclose this Presentation or the contents hereof (including the potential investment opportunity described) or any
other related information provided by the Fund Sponsors or by its agents to any person other than employees of recipient evaluating this potential investment opportunity on recipient’s behalf without the prior written
consent of the Fund Sponsors.
While the information contained herein has been obtained from various sources which the Fund Sponsors believe, but does not guarantee, to be reliable, the Fund Sponsors do not represent that it is accurate or
complete and it should not be relied upon as such. No person has been authorized to give any information or make any representation or warranty regarding the subject matter hereof, either express or implied, and,
if given or made in this Presentation, in other materials or verbally, such information, representation or warranty cannot and should not be relied upon nor is any representation or warranty made as to the accuracy,
content, suitability or completeness of the information, analysis or conclusions or any information furnished in connection herewith contained in this Presentation and it is not to be relied upon as a substitute for
independent review of the underlying documents, available due diligence information and such other information as prospective investors may deem appropriate or prudent to review. The Fund Sponsors, their
agents, their respective affiliates, and each of their respective shareholders, members, officers, directors, managers, employees, counsel, advisors, consultants and agents (“Representatives”), expressly disclaim any
and all liability for express or implied representations or warranties that may be contained in, or for omissions from or inaccuracies in, this Presentation or any other oral or written communication transmitted or made
available to a prospective investor or its Representatives. Without limiting the generality of the foregoing, nothing contained herein is or shall be relied upon as a promise or representation as to any matter, including,
without limitation, the future performance of the potential investment opportunity described herein. None of the Fund Sponsors, their agents, or their respective Representatives is under any obligation to correct any
inaccuracies or omissions in this Presentation. Each prospective investor will have the sole responsibility for verifying the accuracy of all information furnished in this Presentation and in any other due diligence
information furnished to a prospective investor, and each prospective investor shall have the sole responsibility for determining the value of the potential investment based on assumptions said prospective investor
believes to be reasonable. There shall be no recourse against the Fund Sponsors or any of their Representatives in the event of any errors or omissions in the information furnished, the methodology used, the
calculations of values or conclusions. Without limiting the generality of the foregoing, any historical information or information based on past performance included herein is for informational purposes only, has
inherent limitations and is not intended to be a representation, warranty or guarantee of future performance. All of the information presented herein is subject to change without notice. Actual returns to potential
investors may be lower than the figures shown herein. Projected performance data shown constitutes “forward-looking information” which is based on numerous assumptions and is speculative in nature. Actual
results may vary significantly from the values and rates of return projected herein. There can no assurance that the Fund will realize its rate of return objectives or return of investors’ capital. Potential investors should
have the financial ability and willingness to accept the risks (including without limitation the risk of loss and lack of liquidity) characteristic of investments in entities such as the Fund.
AN INVESTMENT IN THE FUND WILL NOT BE APPROPRIATE FOR ALL INVESTORS. INTERESTS IN THE FUND WILL INVOLVE A HIGH DEGREE OF RISK AND ARE INTENDED FOR SALE ONLY TO
SOPHISTICATED INVESTORS WHO ARE CAPABLE OF UNDERSTANDING AND ASSUMING THE RISKS INVOLVED. INVESTORS MAY LOSE ALL OR SUBSTANTIALLY ALL OF THEIR INVESTMENT.
THE INTERESTS IN THE FUND HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY
US. STATE OR ANY NON-U.S. JURISDICTION, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
SUCH APPLICABLE LAWS. INTERESTS IN THE FUND HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US. SECURITIES AND EXCHANGE COMMISSION OR BY THE SECURITIES REGULATORY
AUTHORITY OF ANY STATE OR ANY OTHER RELEVANT JURISDICTION, NOR HAS ANY OTHER AUTHORITY OR COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
*The representative of the Fund in Switzerland is Hugo Fund Services SA, 6 Cours de Rive, 1204 Geneva. The distribution of Shares in Switzerland must exclusively be made to qualified investors. The place of
performance and jurisdiction for Shares in the Fund distributed in Switzerland are at the registered office of the Representative.
** The Fund is registered for sale to investors in Japan, Switzerland (qualified investors), Hong Kong & UK (professional investors), Singapore (accredited investors) and USA (accredited investors and qualified
purchasers).
** By accessing information contained herein, users are deemed to be representing and warranting that they are either a Hong Kong Professional Investor or are observing the applicable laws and regulations of their
relevant jurisdictions.
52 AFC Asia Frontier Fund
DISCLAIMER