Diamond Age Russia Fund: Monthly Letter to Investors – January 2011

Following a world-beating +16.66% performance in December, the Fund returned an unremarkable +0.50% vs. +2.19% for the benchmark index, MSCI Emerging Markets Europe (MXMU) in January. In the final hours of a six month +57.77% advance, in which Diamond Age was the #2 performing of all Russia funds and Russian hedge funds tracked on Bloomberg, the Fund deleveraged the book. Over the course of the last three trading days of the year, the Investment Advisor sold down the Christmas rally.

Emerging market equity positions were paired in keeping with this publication’s August 2010 “Two Rate World” scenario and November 2010 view, that EM inflation is a real and present threat to 2011 portfolio construction. Indeed for the YTD performance period, MSCI Emerging Markets (MXEF) was down -2.81% and EM inflows have turned markedly negative.


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