单选题 Some asset managers {{U}}bill themselves as{{/U}} "emerging market specialists", but a manager who knows a lot about one country may not have much expertise in another.
Karine Him, co-founder of one such emerging market specialist, East Capital, has been finding out the hard way how transferable her emerging market knowledge is.
'I'll be very frank with you. When I came to China, that's when I realised how much I knew about Russia. Because I realised how little I knew about China," Ms Hirn says. Ms Hirn moved to Shanghai in 2010 and set up an office there for East Capital in September of that year. The move followed East Capital's decision to expand its provision from funds offering exposure to Russia and eastern Europe to funds covering China.
Rather than start from scratch, in June 2010, the group purchased Asia Growth Investors (AGI)—a small Swedish asset manager focused on China that already had

240m of assets under management. There are two funds: the East Capital China East Asia fund, launched in 2005 and the East Capital China fund launched in 2007. AGI had been managing them from Sweden. But for Stockholm-based East Capital, having a senior person on the ground was seen as a must. "For us, the right way is actually being on the ground and meeting the companies and getting an understanding," Ms Hirn says.
The learning curve has been steep, she acknowledges, and China has not been as easy to penetrate as Russia, which she first visited as a student in 1991. "I had to learn Russian, otherwise I would have been starving. It was to get food. The integration was very total, very quick," says Ms Hirn. It also meant that by the time East Capital set up its flagship Russia fund, in 1998, she had a depth of knowledge about the country. On this occasion, although Ms Hirn is learning Mandarin, she says she does not have so much time.
However, one thing she thinks that is transferable from her experiences in Russia and eastern Europe is caution.
"The main thing is just double-, triple-, quadruple-checking on everything. So you're getting information from somewhere or someone; you don't go just on that. You check with the broker, you check with another analyst, you check with a company that you know has been dealing with the one in question. And this is part of my role to be able to have this level of contacts," she says.
That level of due diligence brings certain limitations. The funds were invested in only about 30 Chinese companies at the point when East Capital made the AGI acquisition and that number is still only just above 40. While holdings might increase it is not an objective. "It's a conviction kind of investment strategy, where .you need to be convinced of the investment case or the sector or the theme, and very certain about the company you're investing in," says Ms Him. That conviction has led East Capital into investments that some China observers have begun to question in recent months.
For example, Ms Hirn says, despite the question marks hanging over the property market, about 5 percent of the China portfolio, across both funds, is in property.
Also questionable to some is the dominance of financials. The East Capital China Fund, which had

13m of assets at the end of December 2011, holds more than 30 percent in financials. The fund is benchmarked against the MSCI China Free index and is 85 percent invested in the mainland of China with the remainder in Hong Kong and Taiwan.
The East Capital China East Asia Fund, which had