Fund Objective

To achieve capital growth.

View on Past Performance

The cash position in the Fund was reduced during the month through the purchase of Tiger Brands and Sasol in South Africa and Teva Pharmaceutical in Israel, and CEZ in the Czech Republic. The holding in ICICI Bank in India was sold at the beginning of the month and repurchased 30% lower three weeks later. The holdings in Megastudy, Shanghai Industrial, CVRD, Gazprom, Unibanco and Credicorp were also increased.The precipitous falls in September were dwarfed by those in October as the benchmark fell a further 27.5% in US dollars, in spite of a sharp rally during the last week of the month. The Fund performed in line with the market, helped by a reasonable cash position as well as strong performance in China and India. This was however countered by weak performance in Korea, Mexico and Russia.

Future Expectations

Finally it seems that the light at the end of the tunnel may not be the oncoming train. There are clear signs that money markets are starting to free up in the USA and Europe. Furthermore action by both the Federal Reserve and the IMF appears to have stabilized emerging market currencies, at least in the short-term.In addition there has been significant policy response, both fiscal and monetary, from developed and emerging countries and there is scope for plenty more, especially from Europe. Clearly the global economy faces a severe downturn but this is consensus now. Therefore the question is whether this has already been discounted by the collapse in equity prices.As equities were the only liquid asset in the October sell-off there is a good case that they were oversold. Consequently the rally that has just started could well last longer than currently expected.

Fund Details