FMG Fund Managers is taking advantage of the revival in the Far East
and emerging markets by introducing the FMG rising3 fund.
This multi-manger hedge fund focuses on three countries - China,
Russia and India - with a different fund manager responsible for
each region. However, the managers will all short-sell overvalued
equities and buy under-valued equities.
Yury Lopatinsky, who also runs FMG's Russian federation first
mercantile fund, will manage the Russian element of the portfolio.
Cheah Cheng Hye of Value Partners in Hong Kong will look after the
Chinese element, while John Thorn will run the Indian element.
FMG Fund Managers has highlighted the three countries because
they have higher growth prospects than their Western counterparts
and are characterised by low valuations. Themes such as low-cost
manufacturing, IT outsourcing, natural resources and cheap labour
have been identified as drivers for economic growth.
The multi-manager approach means investors benefit from the skills
of fund managers who know each market inside out rather than
relying on one fund manager to cover all bases. It also provides
greater diversity than a hedge fund investing in one region.
Emerging markets have rallied recently, partly on the back of
improvements in the US economy, which has given China's export
industry a boost and partly because of the themes identified by FMG
such as banks in the West outsourcing to India.
However, these three countries are volatile and are still in the
process of political and social reform. The arrest of the boss of
Russian company Yukos on fraud and tax evasion, which caused the
stockmarket to fall, highlights this volatility.
A hedge fund may be an appropriate vehicle to tackle volatile markets
because of the ability to make money through short selling and this
may minimise risks in a way that a long-only fund could not. However,
this fund is still likely to be of interest only to sophisticated
high-net-worth investors who are looking to spice up a small part of