Seeking global value at a discount with Establishment

With a bias towards Asian equities, the trust's portfolio is not managed against a benchmark as its aim is to produce absolute, not relative, returns. This means that, although it aims to achieve long-term capital growth, the preservation of capital is of primary importance to the investment objective.

The fund has produced a study return, bringing in 32.73 per cent over a one-year period and 61.58 per cent over five years. Plus it has a modest yield of 1.9 per cent.

It's run by a very experienced management team of three, which should reassure investors somewhat. An extra layer of comfort comes in the shape of the thick wedge of the fund the directors and the board are personally invested in. They own a whopping 27 per cent of the total assets in the fund.

Their main strategy is identifying undervalued companies in Asia as 60 per cent of the portfolio is made up of individual equities in the region - weighted most heavily to China (15 per cent), Hong Kong (2.1 per cent) and India (6.2 per cent). They are keen on industrial and consumer stocks, which make up 13.6 per cent and 11.1 per cent of the directly held equities. For example, they are invested in Nestlé India to the tune of 2 per cent of the portfolio, playing on the potential for growth from the booming consumer population there.

Around 20 per cent of the fund is invested in Japanese and Oriental funds, while another 10 per cent is invested in gold bullion. The managers believe investor demand for physical gold remains strong.

Mick Gilligan, head of research at stockbroking firm Killik, says this bullish attitude towards gold is a smart move and approves of their decision to weight heavily to it. "Gold is very attractively priced at the moment, relative to equities - and it's also closely tied into the global money supply."

One feature of this fund that may cause an issue for some investors is its £47m market cap, making it a relatively small investment trust. For this reason, Mr Gilligan says you shouldn't buy it unless you like it enough to hold it for five years (or three years at the least if it does well). This is because you could risk bid-offer spreads of up to 10 per cent, he claims, which would make the purchase very bad value.

The total expense ratio is 1.7 per cent, which is reasonable for a fund like this. The managers do charge a 10 per cent performance fee on market cap gains that exceed the 10 per cent performance hurdle, but this is a "huge" hurdle according to Mr Gilligan, so you don't have to worry about them creaming off a portion of your profits unless the fund goes through the roof. This is a strong fund that you can grab while it's cheap. Buy.

Establishment Investment Trust (ET.)