Retail fund managers have received a bad rap on occasions for onerous management fees and underperforming the benchmark.

Here’s one occasion where shareholders are fighting back – but the fund manager isn’t letting go without a fight.

Shares in AMP Capital’s China Growth Fund – or Trustee for AMP Capital China Grwth Fund (ASX: AGF) as Google Finance refers to it, are trading at a substantial discount to the underlying net asset value of the share the investment fund holds.

The current share price is 89 cents, but on its website, AMP Capital says the Net Asset Value (NAVB) per share is equivalent to 99 cents. In other words, if the fund was liquidated today, shareholders would receive roughly 99 cents for each share – well above the current share price.

And it’s possible that the China Growth Fund could be wound up and liquidated, thanks to an activist investor.

LIM Advisors – a Hong Kong-based investment firm – has two managed funds that have invested in the China Growth Fund.

The main issue appears to be the huge discount between the trading price and the underlying NAV – which at one stage reached 35.5%.

But LIM Advisors says the responsible entity (RE) for the fund (AMP Capital) has failed to live up to its aims of beating the S&P/CITIC 300 Total Return Index – over any period and has many more problems. If a fund manager has had 10 years to beat its benchmark and never has – surely it’s time to step aside.

AMP China Growth Fund Aim Jul 2016

Source: AMP Capital

LIM Advisors says that the fund has weak corporate governance and potential conflicts of interest – as it explains in full detail here.

The Fund’s NAV has risen by 8% since launch to the end of May 2016, but the benchmark has risen by 8.6% – as the table below shows.

AMP China Growth Fund performance Jul 2016

Source: AMP Capital

Part of the problem is the huge fees AMP charges to run the fund. A base fee of 1.652% per annum, plus an additional 0.12% per year for ongoing fund expenses – not to mention a 20% outperformance fee (not that the manager has ever earned that).

As a result, the AMP Limited (ASX: AMP) group has earned $60.1 million in investment management and RE fees from this fund alone since inception in 2006.

No wonder AMP is fighting tooth and nail for it to continue managing the fund.

LIM Advisors also notes that the manager and RE have never taken concrete actions to try and close the gap between the share price and NAV – until recently – and believes that AMP’s actions are too little, too late. As a result, LIM Advisors is urging investors to vote to wind up the fund at an extraordinary general meeting to be held on July 28.

Should shareholders vote yes, then the fund will be wound up – and the share price should rise to near the NAV.

Foolish takeaway

Is this another case of a vampire fund manager happy to suck out a large portion of its clients’ funds each year and yet do virtually nothing to improve the situation for investors in the China Growth Fund?

Certainly seems to be the case.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.