We have been quite interesting with a closed-end fund, called Aberdeen Asia Pacific Income Investment Fund (TSE:FAP). This fund invests mostly in government bonds of Asia Pacific countries, such as Australia and emerging market countries, such as Indonesia, India, Mexico and Brazil.
There seems to be a similar fund traded in American Stock Exchange, i.e. FAX. Their top holdings are a little bit different; so their dividends are also not the same. Furthermore, these funds are not currency-hedged, meaning there is a risk of currency fluctuation. That’s why; the return of Canadian funds is much worse compared to the American fund. I guess this is mainly due to stronger Canadian dollar recently.
Why are we interested in the Canadian fund (FAP)? The only reason is because Canadian dollar is our “native currency”. We work in Canada and earn money in Canadian dollar. So, it is easier to invest in Canadian fund.
After doing a little research on Aberdeen’s web site, we could not find the management fee of this fund. Management fee is one of our criteria before investing in a fund. We tried to look at the number from Globe and Mail database; and the number is not there either.
Then, we did search on CEFConnect. Unfortunately, we could only get the data for the American fund. We got the following number:
- Management Fees: 0.70%
- Other Expenses: 0.67%
- Interest Expense: 0.82%
- Total: 2.20%
The total expense for this fund is more than 2%, which we think it is pretty high. We assume the management fee of the Canadian fund (FAP) is more or less the same.
What is our conclusion then? Since the management fee seems to be very high, we decided not to invest in this fund.
