Some of the offshore funds invested in Japan have managed to buck the overall trend and turn in respectable performances against a generally horrific background.
GT’s Asian Warrants and Derivatives Funds have done particularly well (see table). Fund manager Michael Lindsell explains that it all stemmed from the decidedly bearish decisions taken in 1992.
“In 1992 we reassessed our view on Japan and decided that market values were far too high and that warrants were effectively worthless. The fund was refocused, taking one big view - that the price of bonds would rise and we wanted to benefit from it. We invested in bond options and other derivatives in the bond area, and this paid off.”
“Then in 1995 we added a second string; trying to derive benefit from the view that the Yen would weaken. We hedged extensively and bought Yen put options. Both strategies have done well for the funds.”
Another manager with a highly creditable performance is GAM. Here, as director Jeremy Smouha explains, performance is down to the shrewd stock picking of manager Paul Kirkby how has been running the fund since 1985. “He invested in companies which he believed were well managed and took little account of index weightings.” David Hunt