MIGO Opportunities (MIGO ) has sold out of India Capital Growth (IGG ) after a rally in both Indian stock market and the trust, with the managers turning attention to Vietnam and Georgia for emerging market exposure.

Asset Value Investors’ Charlotte Cuthbertson, co-manager of the £80m fund of closed-ended funds with Nick Greenwood, said a sharp narrowing in the discount of ICG led to the decision to sell after holding Gaurav Narain’s trust for over a decade.

‘At MIGO we look for discount opportunities; wide discounts where we think the net asset value (NAV) should do well and we will see the discount narrow,’ she said.

‘We invested at a large discount and looked to identify the catalysts, such as more people investing in India, which came to pass.’

MIGO first invested in IGC in 2012 but a recent rally in the Indian stock market – particularly in the small and mid-caps that are Narain’s hunting ground – narrowed the discount to its current level of just over 8%, having almost reached ‘par’ or NAV in March and early May. Over 10 years the shares have generated a 251% total return ahead of the MSCI India index return of 230%.

‘With valuations of mid and small Indian companies looking very full and the discount evaporating we decided it was time to move on,’ said Cuthbertson.

She said the managers were ‘not nervous around the Indian market, but think it’s pretty fully valued at the moment’ and the ‘long-term story around India is attractive’.

While IGC is the ‘end of a profitable investment’ the fund still has some exposure to India via JPMorgan Indian (JII ), which Cuthbertson (below) described as a ‘turnaround situation’.

She noted the underperformance of the last few years that not only left it lagging its peers, but incited a manager change and the introduction of a performance-related tender next year.

‘If it does not improve and we do not see considerable outperformance next year then we have the 25% tender offer,’ said Cuthbertson.

‘It is trading on a mid-teens discount so JII is more a special situation than about getting exposure to India.’

After the ‘incredible run’ in the Indian stock market, which has seen the Nifty 50 rise 25% in the past year and Indian smaller companies soar 60% over the same period, Cuthbertson said her and Greenwood are ‘not chasing exposure in the same way’.

‘We are looking more at Vietnam and Georgia to make up more of our emerging market exposure,’ she said.

VinaCapital Vietnam Opportunity (VOF ), whose fund manager Andy Ho died this month, is the largest position at 5.9% while Georgia Capital (CGEO) is the fifth largest at 3.8% of the portfolio.

‘Both countries are in an economic sweet spot, with growing middle classes, increased urbanisation and strong GDP growth,’ said Cuthbertson.

However, she noted that they ‘both walk tightropes’ politically - Vietnam with China, and Georgia with Russia – and both have ‘decent relationships with their neighbours…and have good relations with the West; they are conduits between the countries’.

Politics in Georgia weighed on MIGO last month with NAV edging 0.6% higher af CGEO crashed 30% after the country passed a controversial ‘foreign agents’ law that sparked widespread protests.

Cuthbertson said the issue was a ‘storm in a teacup’ as ‘Georgia cannot operate in isolation to Europe and the US’. She noted that a majority of citizens were pro-Europe and the elections in October mean it is likely the law ‘will be pulled back and be more conciliatory to the West’.

‘It is not ideal in terms of sentiment but the economy is growing well and CGEO is performing well so it should settle down,’ she said.

MIGO shares trade on a narrow 2% discount and the shares have risen 11% in the past year.