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Fund manager Peter Dalgliesh pumped up borrowing from 5.9 per cent to 7.9 per cent and reined in the gap between his trust's share price and NAV by 3.1 per cent.

However, over the three months to the end of March, the fund returned 4.9 per cent, failing to beat the MSCI All Country Far East ex Japan index return of 9.7 per cent.

Mr Dalgliesh said his underweight to mainstream Asian exporters such as Samsung Electronics and Taiwan Semiconductor Manufacturing Company, together with his exposure to slower southeast Asian markets, contributed to the relative underperformance.

He said: "During the period, Asian stockmarkets continued to be affected by lingering concerns over the global credit crisis and the implications of a potential US recession. Rapidly rising international food and fuel prices led to concerns Asian domestic consumption might slip as household budgets' purchasing power came under pressure."

Despite conceding a disappointing start to 2008, Mr Dalgliesh said he would continue to focus on safer areas of Asian stockmarkets where earnings visibility was clearer, such as regional infrastructure, soft commodities, Chinese healthcare and Thai consumer stocks.

He added: "At the corporate level, first quarter earnings have so far generally been satisfactory. However, limited visibility leaves markets vulnerable to further negative analysts' earnings revisions as risk premiums remain elevated."

Over three years Pacific Assets has returned 180.1 per cent in NAV terms, while the index has returned 186.4 per cent.