GUANGZHOU (Fund China) - Total speaking, the hedge fund makes a quite good performance in the China fund market so far even including a part of funds fell down in November. Thus, is it necessary to opt for the high handling charge hedge fund?

The hedge funds invested in China market rose in double-digits. Furthermore, some other funds advanced more than 100%, the 788 China Fund from Switzerland Heritage Fund Management Co., Ltd rose 104% while the Golden China Fund from Greenwoods Asset Management ltd ( headoffice located in China) was duplicated. And some else advanced more than 30%.

But then, there still has some fears under such a total good performance. Some hedge funds took a big hit in the China equity market’s big slump last month leading to a doubtful thought of its defensive capability to the turbulence. For example, the Golden China fund dropped 9.3% last month while the Golden China plus fund fell 13% published recently heading towards the high growth corporations and Private Equity.

Greenwoods Asset Management did not make any reponse to such a plunge. And the Ginger Capital Management Ltd, one of its fund tumbled 40%, did neither. Speculator wants to gain a good-sized earning even within the risk, Christopher M. Schelling the director of Strategy research department in Thomson Corp said, he also pointed out it would be un-surprised if the Shanghai Composite Index plummeted largely in the following months.

The 788 China Fund seemed to have suffered from the turbulence defensibly with a 2.4% rise while the Shanghai composite Index fell down 9%.

Karim Daou, the vice manager of the Heritage Heritage Fund Management said, they will speculate according to the macro-strategy and the gross achievement performance. He also said, fund speculation is for protecting the asset, then evadeting the negative influence by the inflation and interest fluctuation, and at last pursuing the further achievement growth. They will not aim at an index so as to be more flexible in asset protection.

The slump is a alarm signal showing that a high holding in fund managers and a un-inadequated control for risk although the real reasons for the slump are not clear yet, said Veryan Allen, the consultant for institution to the Janpan market. And the China’s equity market is different, the investors cannot do short hedge, but there are many ways for hedge including a short hedge of Depository Receipts in American market

She advised the investor wanted to do long hedge in China market to attend the ETF so as to cut out the high handling charges in hedge funds. For instance, the iShares FTSE/Xinhua China 25 Index Fund rose 72% up to November. Everyone can earn money when the market is smoothly, the investor can choose the simpleless and costless and direct varieties .

Copyright Fund China 2008.

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