The average European long/short Fund has delivered excellent returns for investors, achieving positive returns every year from 1998 to 2006 and a total return over that period of over 192%. In contrast the MSCI Europe was negative three years out of nine, over the same period. The historical performance of European long/short has also shown interesting correlation characteristics during different stages of the stock market cycle. During the bull market in 1998, 1999 and until the peak of the market in September 2000, the performance of the average European long/short fund (EuroHedge European Long/Short Equity € Index) showed a close correlation to long only equities (MSCI Europe), albeit generating a significant degree of out performance. However as soon as the market turned down that correlation changed, with managers continuing to make positive absolute returns for investors despite weak stock markets. In addition the total return achieved by European long/short was significantly greater than the return achieved by the average hedge fund, as represented by the CSFB Tremont Hedge Fund Index.

Source: EuroHedge, Lipper, Tremont to March 2007

These returns have also been achieved at lower volatility than the long-only equity index; the average European long/short fund had an annualised standard deviation of 7.61% vs. 16.30% for the MSCI Europe. Holding the asset class as part of a portfolio would have significantly enhanced returns, while at the same time reduced the overall risk of any equity portion of the portfolio.

Source: Hedge Fund Intelligence, MSCI, CSFB Tremont, Turnstone Asset Management

By investing in a professionally managed fund of hedge funds, such as the Turnstone European Fund, investors are accessing a diversified portfolio of some of the very best European long/short funds, aiming to deliver above equity returns, with bond-like volatility, remaining at all times focused on minimising downside risk. Equally the fund is aiming to deliver a higher return, net of all fees, than the average European long/short fund, which the manager of the fund, Amanda McCracken, has successfully achieved since the start of her track record in February 2001.

Source: Hedge Fund Intelligence, MSCI, CSFB Tremont, Turnstone Asset Management