According to the six month results ending 31 December 2013, the net asset value total return of the trust was -5.7%, underperforming the MSCI Emerging Markets Index's -1.4%.
At the end of the period, the discount was 10.3%. The board said it will look at discount control mechanisms to ensure the fully diluted discount does not exceed 10% for an extended period, "but only if the discount is out of line with our peer group and market conditions are orderly."
He added: "As we head in to 2014, market conditions are not recovering and currency weakness in emerging markets has again moved to centre stage."
The trust's largest country underweight, to Korea, also held back performance, according to Numis Securities.
Meanwhile, the management fee on the trust as of 1 July 2014 will be reduced from 1% to 0.75% on gross assets above £800m (current gross assets are £688m). The performance fee remains unchanged.
Pockets of vulnerability
Looking at the year ahead, Numis added that pockets of vulnerability did not amount to a global emerging markets crisis, given the strong fiscal accounts, corporate balance sheets and floating currencies exhibited in some regions. However, the broker added that market pessimism had depressed valuations, with some optimism expected over a 1-3 year horizon and praised the trust's long-term track record.
Forey said he expected continued headwinds from the recovery of the developed world and the likely eventual increase in interest rates, but was encouraged by FX being used as an adjustment mechanism.
"Not only is this much less damaging than a system which puts all the stress on adjustment of internal prices in an economy, but it also means that stocks are getting cheaper. Low valuations must mitigate a lot of the current pessimism about emerging markets and one thing we know from the past is that the world does not end when gloom and pessimism are widespread; instead, it offers better value; and currencies will revert to the mean, in real terms, in the long run.
"While it may be too early to call a definitive upturn in the asset class, we are seeing increasing numbers of interesting opportunities at the stock level, which has always been our principal focus as investors," he concluded.
