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From Precy Dumlao, Opalesque Asia:

Ermitage Asset Management’s CIO Jonathan Wauton said, in a fund report sent to investors yesterday, that the funds’ portfolios would be positioned generally defensive in the near term as uncertainties continue to hound the markets. He said the company does not want to increase aggregate directional risk while market sentiments remain fragile, but at the same time has “the desire to increase risk at the manager level to take advantage of the dispersion trades.”

Equity Long/Short flat Ermitage’s European equity Long/Short FoHFs, the European Absolute Fund and Global Long Short Fund finished January close to flat, 0.07% and 0.53% respectively. The European Absolute Fund, launched in Dec-99, produced a compounded return of 3.47% over 1 year. The Global Long Short Fund, launched in Aug-07, posted a compounded return of 4.09% over 1 year.

In general, equity Long/Short funds held up reasonably well, with the most obvious casualties being those funds running a combination of a net long bias and cyclical or emerging market exposure.

Ermitage’s managers continue to believe that stock dispersion should increase: “Now markets are normalising, the strong are starting to prey on the weak and the weak are getting increasingly desperate,” the report says. Risk premiums are back to 2007 levels and fundamentals are not really responsible for the massive price gains and that needs to change.

Equity indices we......................

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