Icap 5 years after listing

http://ooibenghooi.blogspot.com/2010/10/icapitalbiz-5-years-after-listing.html

If you made an investment 5 years ago, after going through a global financial crisis, how much is the worth now?

It has been exactly 5 years since Icapital.biz was listed in Bursa on 19 October 2005.
Let’s see how Icapital has fared thus far versus KLCI and unit trust funds for the past 5 years:

Summary:
Average Annual Compounded Return of Icapital NAV: 19.87%
Average Annual Compounded Return of Icapital share price: 14.98%
Average Annual Compounded Return of KLCI: 10.16%
Average Annual Compounded Return of similar unit trust funds (%): 11.49

(Hmmmm.... Fixed Deposit is "safe"... But what is the return compared to equities even after global financial crisis?)

Details:

NAV of Icapital.biz on 18 October 2005: RM 0.99
NAV of Icapital.biz on 13 October 2010: RM 2.45
Total gain in NAV (%): 147.47
Average Annual Compounded Return: 19.87%

Share price of Icapital.biz on 18 October 2005: RM 1.00
Share price of Icapital.biz on 13 October 2010: RM 2.01
Total gain in NAV (%): 101.00
Average Annual Compounded Return: 14.98%

KLCI as of 18 October 2005: 922.64
KLCI as of 13 October 2010: 1496.97
Total gain in KLCI (%): 62.25
Average Annual Compounded Return: 10.16%

While KLCI is still a few percents away from her all time peak, Icapital has been breaking few NAV all time high records since last few weeks.

At this moment, Icapital.biz is the only closed-end fund listed in Bursa. So comparison is made to other open-end unit trust funds that are considered relevant.

Comparison is made with 112 funds that are at least 5 years old of which their performances were published in The Edge, the Normandy fund table “performance of unit trusts in Malaysia as at October 14, 2010”. Categories selected include: Malaysia Equity, Malaysia Equity-Index, Malaysia Equity-Smallcap, Malaysia Flexible Asset Allocation, Malaysia Mixed Assets.

Average 5 year total gain of these unit trust funds(%): 72.23
Average Annual Compounded Return of these unit trust funds (%): 11.49

Based on the return on the Icapital share price vs 5 year performance of these fund, Icapital was ranked #21/113.

But if we are to gauge based on fund’s NAV, Icapital was ranked #5/113.

Despite Icapital consistently outperformed the benchmark composite index by a wide margin, the share price of Icapital which had been trading at premium previously, has been traded at discount to her NAV since the selldown of equities during recent global financial crisis and it is now trading at about 18% discount to her NAV.

Against open-ended fund, liquidity is a slight disadvantage to closed-end fund. Investors may also have concerns that the fund is relying too much on Tan Teng Boo alone.

But with the consistency and outstanding track record of the fund and lower transaction fee against most of the open-end unit trusts, I think the discount of such magnitude could be too excessive. If the fund is able to maintain this kind of stellar performance, investors of Icapital could benefit not only from the superior performance of the fund over long term but also narrowing of the discount to NAV or even being traded at premium one day to reflect her true worth, like what happened to some of the undervalued stocks in Bursa with the run-up in BKAWAN’s share price being the latest instance.

Shouldn’t investors consider alternative such as Icapital.biz if they plan to invest in unit trust funds or exchange traded funds?