Board pledges 'significant action' to save flagging India fund

News Team, 26/05/2020

The board of Ocean Dial’s India Capital Growth Fund has pledged to take “significant actions” to save the fund, following a period of underperformance.

In a statement released this morning, the fund’s chairman Elisabeth Scott said “disappointing” performance meant the closed-ended investment company would likely fail its three-yearly assessment in August, thus triggering a continuation vote.

The board had therefore decided to hold an extraordinary meeting on 12 June to decide the fund’s future.

“The choice is between winding up the company at a time when Indian mid-cap and small-cap equities are trading at close to their 15-year lows; or taking strong measures to improve performance and provide shareholders with a way to redeem the bulk of their holdings, if they wish, at a set date in the future,” Ms Scott said.

Elisabeth Scott

Proposed measures requiring shareholder approval included the introduction of a biannual redemption facility starting in December 2021 which gives shareholders an opportunity to partially or fully exit at a discount, and a change to the fund’s fee charging structure which meant investors would likely pay less.

The fund’s investment objective is to provide long-term capital appreciation by investing indirectly in companies based in India. The fund’s rules allow for investment in mainly listed small and mid-cap firms, with a smaller proportion of unlisted firms.

Over three years, the fund’s net asset value had fallen 21.77 percent. Its Morningstar Benchmark, BSE Mid Cap, was up ...

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