FTAdviser.com

Advertising

The investment trust suffered a 19.5 per cent slump in its NAV and its share price fell 24.7 per cent over 12 months to 31 July.

Pacific Horizon's comparative index, MSCI All Country Far East ex Japan, performed much more strongly, declining 12.7 per cent over the same period.

Pacific Horizon, managed by Edinburgh-based fund management firm Baillie Gifford, said performance suffered despite the fact it had reduced exposure to expensively valued companies, increased cash and held a put option on the Hang Seng China Enterprises index.

Baillie Gifford's Gerald Smith, fund manager of Pacific Horizon, said the large falls in holdings that had previously performed well, such as Vietnamese funds, Korean shipbuilders and Chinese companies listed in Hong Kong, were the major reasons for the poor performance.

"We've taken the view the world is not coming to an end. We've been caught out by people's great fears of a global slump, and missed out on the extreme funk that has hit Asia. If we thought people would take such fright we would have been a bit more selective in what we owned, and taken more cash," said Mr Smith.

However, despite Mr Smith saying the near-term outlook for companies is "uncertain", he argued the fund will hold on to its stocks in the hope of rising share prices over the next year.

"We're perversely getting more optimistic about the outlook. Valuations have got so ridiculous it's hard to see how we will not make money from our investments this year," said Mr Smith.

During the year, the investment trust issued 350,000 shares at a minimum premium of 5 per cent of net asset value per share.

The fund's board has also recommended a dividend increase to 1.3p a share from 1.1p for the previous year. Earnings per share for the year rose 31.7 per cent to 1.91p from 1.45p for last year.