@MarsC - continued from BOL forum Apologies for the...

@MarsC - continued from BOL forum

Apologies for the misinterpretation. In answer to your question I honestly don't know which fund would perform better (though probably not momentum). Deep value has its place and if done well can be very rewarding, as FOR demonstrates. But quality/growth can also produce excellent returns if done well.

As Steve Johnson has alluded to in recent comments, the abundance of deep value opportunities are no longer apparent in mining and construction services. The greatly increased price of BOL seems to be a product of sentiment as well as fundamentals.

FOR* consistently trades at a 10% premium to NAV. My argument is that returns from a closed fund are a function of both the underlying assets and the NAV premium/discount.

For example if:
Fund A has a NAV premium of 10%
Fund B has a NAV discount of 10%
If we were to generate a return of 10% p.a. from both funds, Fund A would have to return 11%p.a. for perpetuity and Fund B 9%p.a after fees.
A 2% outperformance is significant. An excellent fund manager may be able to do this consistently.

* No doubt FOR are ‘best of breed’ and may well outperform by more than 2% p.a after fees on a consistent basis.