A Fund to Follow - part 2

Back to Turnstone. This fund will seek to achieve its investment objectives through investing in listed and unlisted hedge funds exposed to Pan European equity markets. This will predominantly be in long/short equity hedge strategies but may include market neutral and event driven strategies. The performance charts speak for themselves.

European equity markets continued their strong run from their March lows powered ahead by robust corporate earnings, record levels of M&A activity, an improvement in US and European growth, and abundant liquidity. The Turnstone European Fund returned 1.6% while the MSCI Europe Index rallied 2.5% (64% upside capture - slightly below the average achieved during this year’s bear market of 70%).
There was a noticeable trend for large caps to outperform more overvalued mid and smaller companies. Financial stocks did not perform well despite further M&A activity in the sector during the month. The best performers were pro-cyclical sectors, such as Mining, Industrials and Autos that all outperformed on the back of greater confidence about economic growth. The worst performing sectors were Healthcare, Travel / Leisure and Transportation. The strongest markets were Portugal (+8%) and Spain (+7%) while the weakest were Italy (-1%) and Sweden (+0%).
During early June, the markets experienced a short term correction. Fears that rising inflation would trigger higher interest rates led bond yields sharply higher prompting investors to rotate out of interest rate sensitive stocks into defensive large caps. Many market participants now appear cautious given the prevailing high levels of short interest. Central banks remain hawkish to address inflationary pressures and global economies remain strong. Managers have added stock specific shorts to protect themselves against rising bond yields and are also short UK consumer related and banking names over concerns of rising UK interest rates. It’s worth noting that Europe’s year on year GDP in Q1 was three times the level of the US.
Amanda McCracken (AIIMR) has over 10 years experience of managing multi-manager funds. She previously managed the Condor European fund from February 2001 until August 2003 while she was at Appleton International, where she was also CEO. In December 2002 the Condor European Fund won the ‘Best Newcomer with inception in 2001’ accolade at The Hedge Funds Review Annual European Fund of Funds Awards. The panel of judges was ‘impressed with the depth of the investment process employed by this fund of fund manager and the consistency of returns achieved on a month by month basis by this portfolio.’ The Turnstone European Fund was nominated by InvestHedge in March 2005 in the ‘Best Newcomer’ category.
In simple terms anyone buying European ETFs, trackers or index funds was taking almost 3 times the risk to achieve a tiny fraction (just around 7%) of the cumulative return.
Sorry for being boring - asset allocation should be active and should be adaptive but quality NEVER goes out of style.

Top holdings:
Fund Name                                               Fund Manager
Lansdowne UK Equity                                Peter Davies
Crescendo European                                  Darrell O’Dea
Cazenove European Equity Absolute Return Chris Rice
Cotton Hall European Opportunities Dominic Moross
Marshall Wace European Core Fund Daoud Zekrya

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]@mbmg-international.com.com

Snap Shots: by Harry Flashman

Pentax *istDS

Regular readers of this column will know that I was almost the last bastion of film photography - however, all that is about to change. The reason is simply the ‘instant gratification’ you get with digital imaging. You know ‘instantly’ whether you have got the image you wanted. There are also sub-reasons that include cost. With digital technology now such that anyone with minimal computer skills can download images from a digital camera, the photo shop next door has almost become redundant. And the initial purchase cost of a digital has also gone down. The electronic premium no longer applies.
This week I was given a Pentax *istDS digital to try. This is not a new camera, having been out for a couple of years, but is a good example of just what is ‘out there’ and the technology currently available.
For me, this camera was going to pass or fail, depending upon image quality and ease of use. I have to admit that as soon as someone tells me that you just “scroll down the menu”, my blood runs cold. For me, a menu is something you order from in your favorite restaurant, not some way of deciding upon options in a camera. I also admit that I have problems with the remote control on my TV. I am no digital technocrat.
On my first acquaintance with the camera, I was impressed with the simple rotary knob on the top of the camera which allowed for easy selection of modes (my fear of menus again)! The lens as supplied is an 18-55 mm mini-zoom, and again this was very easy to use.
To use this camera in a basic mode was very easy. Switch on with the on-off button which is also the shutter release on the top right, then select the mode with the rotary knob on the left side of the camera, look through the bright viewfinder, compose and shoot. In this form, using any of the automatic modes (Program, Aperture priority, Shutter priority) you will get good images, without having to get involved in photographic technicalities, and can concentrate on composing and zooming. After all, it is the final result that is important in a photograph, not how you got it! And I must say I was impressed with the ease of use and the sharpness in the final image.
So that was the basic photography that is possible with this camera. Does it do more? Yes it does, a whole lot more, making it a suitable ‘pro-am’ package. To begin with, as well as the automatic modes there are pre-programmed settings such as night shots, portrait, landscape, macro and action and Metered Manual plus Bulb. That is enough to begin with, but there is also a depth of field switch under your index shutter finger. You do not have to take your finger away from the shutter to use it. An exposure compensation button is directly behind it and can be operated by your index finger as well, so you can bracket if unsure of the auto-metering. Under your thumb you will find the selection wheel and the AE-lock button. This latter feature means that when taking a shot contre-jour (back-lit) you can take the exposure from the face, hold the lock button and walk away from the subject and compose the shot, and the face will be properly exposed. The metering is multi-point, with 11 zones.
Like most modern cameras, it is Auto-Focus (AF) but you can turn this feature off if you wish, with a small button close to the base of the lens. And you can also turn the flash off. This Pentax will also take older Pentax lenses as retro-fits, a boon for the dedicated Pentax follower.
What are the drawbacks? It is only 6.1 megapixels, while the latest boasts 10 MP, but for the vast majority of applications, 6 MP is more than enough. It also does not have the new ‘anti-shake’ technology, but for many photographers, this is not needed.
All in all, the Pentax *istDS is an excellent user-friendly camera which delivers sharp, well exposed pictures, with almost all the features a ‘pro-am’ photographer would want.

Modern Medicine: by Dr. Iain Corness, Consultant

A wayside inn of ill repute

The good book states that the term ‘diverticular disease’ comes from the Latin word ‘diverticulum’ which means a “small diversion from the normal path”. However, the late Max Hickey, my old Professor of Anatomy, claimed it was Latin for a “wayside inn of ill repute”. His definition was much more memorable.
However, a diverticulum as it refers to you and me, is a small bleb or ‘pouch’ that pops through from the inside to the outside of the colon, and usually seen in the descending colon which leads down to the rectum and anus.
When you have a few of these diverticulae (plural of diverticulum - Latin) we say you have the condition called ‘diverticulosis’. This condition, on its own, does not produce any symptoms, so you do not know if you have it. A bit like early stages of hypertension or even diabetes.
When diverticulosis causes symptoms, it can do so in one of two ways: first the pouches can rupture into the abdominal cavity, causing localized irritation and inflammation or produce an abscess. This inflamed diverticulosis is now called ‘acute ‘diverticulitis’ (remember when we put “-itis” on the end of a word it means inflammation). Patients who have diverticulitis often will usually present with a sudden onset of pain located in the lower left part of the abdomen over the sigmoid colon. It is frequently exquisitely tender and is associated with fever and a high white blood cell count.
Secondly, the diverticulae can begin to bleed to produce significant amounts of rectal bleeding. This can also be painless, just to confuse your gastroenterologist!
So who gets it? If you are Caucasian and you are over 65, then you have a 50 percent chance of having it already. The reason given for this is the lack of bulk present in the diet of industrialized countries allowing muscle contractions to create localized areas of high pressure allowing diverticulae to form. Some pundits say that the pressure created by muscle contractions of the left side (sigmoid) of the colon is considerably greater than those of the right side (ascending colon). This could explain why diverticulae are more common on the left than right side of the colon. However, this does not explain why Asians get diverticulae on the right side. (Ah, the mysterious East! Or perhaps the theory is wrong!)
Acute diverticulitis is usually diagnosed by the typical history and a physical examination demonstrating tenderness over the sigmoid colon (left lower part of the Caucasian abdomen). Fever and a high white blood cell count generally confirms the diagnosis. A CT scan or ultrasound of the lower abdomen can be very helpful in showing an inflammatory mass over the sigmoid colon.
If the presenting symptom is rectal bleeding, this can be a bit more difficult to diagnose and is frequently a “diagnosis of exclusion” by which we can find no other cause for the bleeding. Fortunately this is not common, and less than five percent of people with diverticular disease of the colon will bleed.
Acute diverticulitis is treated with antibiotics for 7-10 days. These antibiotics frequently have to be given intravenously. Diet is often severely limited during the first few days of treatment. Most patients will recover completely, but occasionally surgery is necessary in order to drain all the infected material and completely empty an abscess cavity.
So can you do something to stop your diverticulosis becoming diverticulitis? It hinges on eating more fiber. High-fiber foods, such as fresh fruits and vegetables and whole grains, soften waste and help it pass more quickly through your colon. This reduces pressure inside your digestive tract. Aim for 25 to 30 gm of fiber each day. Fiber works by absorbing water and increasing the soft, bulky waste in your colon, but if you do not drink enough liquid to replace what is absorbed, fiber can be constipating.
Respond to bowel urges. Do not delay. Delaying bowel movements leads to harder stools that require more force to pass and increased pressure within your colon.
Finally, exercise regularly. Exercise promotes normal bowel function and reduces pressure inside your colon. Try to exercise at least 30 minutes on most days. At least try!

Learn to Live to Learn: with Andrew Watson

Forgetting how to listen

As Dumbledore said, “A child’s voice, however honest and true, is meaningless to those who have forgotten how to listen.” Dumbledore is not alone. His sentiments are at the heart of St Exupery’s “The Little Prince”, in which the crashed, confounded pilot (Exupery himself), by meeting the paragon of childhood, The Little Prince, is forced to re-examine the adult world of pre-conception, assumption and false expectation. I have to admit, slightly ashamed, that I wasn’t introduced to this book until I was in my twenties, yet I felt utterly reassured, comforted and inspired by its contents. I had lived a bizarre paradox of existing socially in relatively opulent circles, but working in deprived, dangerous and dirty inner city environments. It was like peering into two different worlds and sometimes I’m not at all sure how much I felt I belonged to either. But the level of ignorance of each other’s realities, despite their proximity, was profound, astonishing and I suppose, a bit scary. Mind you, that’s England for you, a country of class, aspiring on the surface to meritocracy and egalité but far, far from it in grim reality. When I drove past the places I worked with my friends at the weekends, we joked that it was a “windows up area”.
No surprise then, to discover that “Ten years of Labour rule have failed to create a classless society” according to a Guardian/ICM poll published on October 20th. It shows that “Britain remains a nation dominated by class division, with a huge majority certain that their social standing determines the way they are judged.” 89% of those questioned said they thought people are still judged by their class - with almost half saying that it still counts for “a lot”. Only 8% thought that class does not matter at all in shaping the way people are seen.
Listening is a skill; a skill that can be learned and one that can be taught. But it is not such an easy thing as we might think. Learning to listen necessarily involves considering the very real possibility that you might be wrong and that the person we are listening to might be right. I’ve been in too many school environments where the attitude towards students is Dahl-esque; “I’m big, you’re small and there’s nothing you can do about it.” Or, a minor incident of discipline which made me sigh with despondency; “Look, this is not an equal relationship” the teacher growled to the student, “You are not equal to a teacher. We are up, (gesticulating) and you are down there.” This runs contrary to my idea both of what education is and what listening means. If you adopt a position of superiority before you have listened to another person, then what chance do you really have of understanding what they are saying?
Listening does not mean allowing the other person to talk for as long as they wish, making sure that we don’t interrupt (a very common and mistaken interpretation) and then regurgitating the same sentiments we expressed before they started talking. How many of us hear, but do not truly listen? Listening involves putting yourself, truly, in the other person’s position, seeing and understanding their perspective, because, as I think we can all agree, it is often difficult to arrive at one single interpretation of “truth”. Instead, there are “many truths”.
Conflict can follow very swiftly from a conversation where two people hold different views, but neither acknowledges the validity of the other’s, or at least the fundamental right of the other to have that view. Justifiably pointing out flaws in another person’s logical constructs of argument is another issue. It is embarking on a conversation with a compassionate state of mind which is the important part. And before some of you start writing in on this point, this is not a leftist argument for cultural relativism. It is an argument for acknowledging that learning is a two way street, a reciprocal arrangement between interlocutors. “We are each other’s students and each other’s teachers” is a mantra my students and indeed my family, hear oft repeated. Learning to live by this mantra is a happy challenge for me.
Along with “The Little Prince” there are two other books that I regard as required reading for students who may have forgotten how to think like a child, or who have never learned to listen. I might extend the recommendation to anybody who cannot listen. One is Paulo Coelho’s “Alchemist” which explores the idea of listening in the context of a comprehensive understanding of our place in the universe. The other is “Siddartha” by Herman Hesse, a journey of spiritual self discovery which deals very much with the antidotes to greed, hatred, jealousy and ignorance.
Listening isn’t just a philosophical matter, of course. I read an article in the British Medical Journal this week by Mike Shooter, president of the Royal College. Bemoaning the apparent dearth of “listeners”, Shooter articulates his increasing alarm about what [medical] students are subjected to in the name of education. The applicants he meets at medical school interviews, he says, are alive with the prospect of “helping people, as people” which sounds reassuring. But years down the line, when he meets them again in their psychiatry placement, their heads are “so stuffed full of lists that they seem to have forgotten how to listen to people”.
Whilst the idea of ‘lists’ has some importance, not least for passing exams in an exam obsessed world, if our idea of what “success” means comes with the additional expense of distancing oneself from humanity, then something has surely gone wrong somewhere? The question, then, is what might be done in this quasi-cosmic world to address such an issue, when it is so easy not to communicate with anybody else and not to develop the skills that enable you to do so? Where do you begin? Perhaps with Churchill; “Courage is the first of human qualities because it is the quality which guarantees all others”.
Next week: Courage: the first of human qualities