Investment Philosophy

The average Asia ex Japan long/short ‘equity hedge’ fund has delivered in excess of 230% from January 1998 to April 2006 in US Dollar terms with only the year 2000 producing a negative return. The Japan long/short ‘equity hedge’ fund universe has delivered in excess of 180% over the same period with a small negative return in the year 2000. In contrast, the FT Asia Pacific ex Japan returned less than 75% and the Nikkei 225 less than 50% in US Dollar terms over the same period. By investing in a professionally managed Fund of Hedge Funds, such as the Turnstone Asian Fund, investors are accessing a portfolio of Asian long/short ‘equity hedge’ funds with the aim of delivering close to market returns during “bull” markets through stock selection, asset allocation and balance sheet management and will limit the downside when Asian markets are in a “bear” phase.

Each country’s equity market differs due to the heterogeneous nature of their economies, political landscapes, industries and financial systems. Specialist knowledge of local markets with a global perspective is required to take full advantage of the opportunities. The fund seeks to take advantage of the lack of quality investment research in the region providing a real advantage for skilled stock pickers to “see through the market noise” and discover the emerging winners. The benefits of single country specialists are balanced with those of regional managers. While fundamental research is at the core of the investment philosophy, in recognition of the impact of liquidity flows on stock prices, funds which are also able and willing to manage the balance sheet are preferred.