It has not been an easy year for China-themed hedge funds. Many are looking up at former dizzying high-water marks and wondering when the tides will ever stop receding in order to give them a chance at copping performance fees again.

The Triskele China fund is one of the better performers. In the 12 months to end-May, the fund rose 55.1%, outperforming the MSCI China indexÆs 29.5% gain.

The CEO of Triskele is Otto Chan, who has previously been head of Hong Kong and China sales at HSBC, Citi and UBS. The CIO of the firm is Tsuyoshi Shiba, who used to work as a fund manager with Sumitomo Mitsui Asset Management.

Year-to-date, the fund is up by 2%. It was a rocky start at first, with the fund falling 9% in January (although that compares to a 23% fall that month in the Hang Seng H-share index).

In the last quarter of 2007, the funds exposure had been between 60& and 80%. Two weeks into January, Triskele slashed exposure, bringing it down into negative territory. It was held at that level for two months and exposure is now standing at around 23%.

öWe are keeping low beta stocks on our long book and high beta names on our short book,ö says Shiba. ôHigh beta is most evident with financial stocks, where valuations still look high. We are also bearish on property, as there still appear to be downward pricing pressures.ö

The fund was established in mid-2007 and now stands at $34 million. The fund managers hope that by virtue of having performed well so far this year they can now raise assets. Management fee for the fund is 1.5% and performance fee is 20%.

ôFrom our exposure figures, it might seem as though we are market neutral,ö says Shiba. ôBut we arenÆt, because when beta adjusted our short positions are greater, meaning that we stand to do better if the market falls.ö

The æTriskeleÆ is an ancient three-legged Celtic symbol of good fortune, found on the flags of Sicily and the Isle of Man. Transliterated into Chinese, the word has been adapted by this new fund into a phonetic sound-a-like that equates to æinvesting in companies with high returnsÆ.