Marco Polo’s Pan China Fund Faces Rough Seas

Sep 9 2008 | 9:15am ET

Marco Polo Pure Asset Management’s new long/short China-focused hedge fund has had difficult start to its journey.

The MPM Pan-China Fund launched in May, when volatility hit the Chinese markets with the force of a typhoon. In its first three months of trading, the fund is down 15.65%. However, the fund’s sponsor, Magnum Fund Management, is trying to stay optimistic about its latest offering.

“Among the China domestic market’s other advantage is that the A-Share [price/earnings to growth ratio] is now one of the lowest of the major markets,” according to the firm’s latest investor newsletter.

“Year-over-year earnings growth has accelerated to approximately 60% across the A-Share market, and earnings are expected to increase by 30%-40% annually over the next five years. In addition, Chinese government pension assets exceed US$200 billion, but only 24% are currently invested equities, which translate into a lot of room for growth.”

The MPM Pan China Fund charges a 2% management fee and a 20% incentive fee with a minimum investment requirement of $250,000 and monthly redemptions.

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