How are you measuring up with your investment return? (8)

Read? how are you measuring up with your investment return? (7)

Updated.

Banking on the 3-Rights

Right price, right business and right management are key, writes GENEVIEVE CUA

 

FUNDS which profess to be absolutely return-oriented typically wield a number of tools to achieve this - cash, short sales of securities, market timing and derivatives, for instance. Not so for Yeoman Capital Management. The home-grown firm, whose flagship fund has an enviable 16-year track record, eschews cash and market timing in its quest for absolute returns. Instead, the Yeoman 3-Rights Value Asia Fund relies on old fashioned, long-only value stockpicking, and stays fully invested at any single point in time. So far, the results have been rewarding. In the current year to end-October, the fund has generated returns of 19.34 per cent, compared with the MSCI Far East ex Japan index return of 3.45 per cent.

Since its inception in October 1997, the fund has achieved cumulative returns of more than 638 per cent, compared with the index return of 110 per cent. This translates to a compounded annual return of 13.3 per cent. An investor who put in $100,000 at inception would have seen his funds grow to more than $738,000 - a tidy nest egg.

Yeo Seng Chong, Yeoman's founder and chief executive, says undervaluation is the "prime and only motivation for investing''. "If we can't get undervaluation, we don't participate. The undervaluation is measured in terms of PE (price earnings multiple), dividend yield, free cash flow and discount to balance sheet book value. We also look at return on equity to make sure our stocks have capital efficiency.

"We have a track record and returns consistent with our methodology. Because we have not used cash as a buffer or timing tool, what you see today in performance is entirely due to security selection and portfolio construction.''