LONDON, Nov 17 (Reuters) - Asia-focused hedge fund firm Doric Capital's flagship $206 million small-cap fund rose 1.7 percent in October, an investor letter seen by Reuters showed.
That gave the fund, which targets Asia's 'emerging blue-chips', a return of 5.6 percent for the year to end-October, against a broader MSCI Asia ex-Japan index, which rose 7.9 percent in October but is down 7.5 percent year-to-date.
Long positions in China, India and Korea contributed most of the positive performance, the investor letter said, thanks to gains for companies including Xinyi Solar 0968.HK and Gujarat State Petronet GSPT.NS .
"We believe the underlying economy in China remains slow but stable, the Indian economy continues to improve gradually and South East Asia is stabilising ... We are closely monitoring for signs of improvement both in the real economy and financial markets to add to some of our best ideas," it said.
October's gains compare with an average monthly return of 0.67 percent for funds investing in Asia, excluding Japan, data from Eurekahedge showed.
Launched in 2004 and run out of Hong Kong by Howard Wong and Rajesh Ranganathan, the fund aims to buy stakes in companies which can grow 20 percent a year and provide a 20 percent return on equity. It has returned 74 percent over the past five years.
Among its core bets on a falling share price, were firms facing structural challenges due to the changing economic situation in China, it said, without naming any.
The gains for its small-cap fund come after Doric chose to close its Doric Focus Fund in 2012, after losing 28 percent during 2011. At that time, the small-cap fund had $42 million in assets, a spokesman for Doric said.
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