Baring’s China Focused Hedge Fund Extends Win Streak

May 18 2007 | 9:32am ET

U.K.-based Baring Asset Management’s China Absolute Return Fund is on a roll. The fund continued its winning streak–it was up 55.61% last year–returning 3.02% in April, which brings its year-to-date returns to 11.64%.  

The fund invests predominantly in securities listed in China and Hong Kong. Its top long positions include Zijin Mining group, a gold producer, and BYD Company, which manufactures and sells rechargeable batteries.

“Overall the Chinese market registered a strong month despite concern about further interest rate rises,” according to fund managers Lilian Co and Khiem Do in their monthly investor letter.

"Markets performed well in April on the back of strong 2006/1Q07 earnings, with the Hang Seng China Enterprise Index (of H shares) up by 4.4%, and the Hang Seng China-Affiliated Corporations Index (of Red chips) up 0.5%. Most companies reported better-than-expected earnings. Financials outperformed the index. Most IPOs in April recorded attractive returns, led by China Molybdenum and Country Garden.”

The managers increased the fund’s net long position from 57% in March to 74% in April as the market stabilized after the correction in March, according to the letter. The fund turned its focus to small to mid cap stocks last month “at the expense of large cap names whose valuations appear fully valued.”

The $52 million Irish-listed fund charges a 2% management fee and a 20% performance fee.

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