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GT Management Asia is launching an emerging markets fund investing in small companies, to tap on the growing enthusiasm in Hong Kong for retail mutual fund or unit trust type investment vehicles.

The fund will be domiciled in Ireland and denominated in United States dollars. Investors need to make a minimum investment of US$10,000 for A shares or US$250,000 for B shares.

The A shares will levy a two per cent annual charge, while the B shares will levy 1.5 per cent. Each will have an initial charge on a fixed unit price until December 10, of up to four per cent.

The fund intends to concentrate its portfolio in high-capital growth investments through holding between 70 and 250 shares in low capitalised stocks in four developing regions: southern and eastern Europe, Asia, Latin America and the Indian sub-continent.

GT is recommending that the fund make up no more than five per cent of an investor's portfolio. It is high risk, but can provide investment returns of about 20 per cent a year.

The fund joins others showing a trend of launching into the Asian, emerging market and smaller companies equity sectors.

Recently there have been launches from Jardine Fleming, with a Pacific smaller companies fund raising US$123 million; and Fidelity Investments, which launched an emerging markets fund that took in US$97 million in its launch period.

In Hong Kong, GT said it would consider investing in companies such as Lamex, Ryoden, MC Packaging and South China Industries.

The fund will not deal in warrants or similar high performance, but high risk, vehicles.

Stock picking, along with a consideration of general economic and market conditions, are the primary modes of stock selection and fund management.

GT Management director James Alexandroff said: ''Small companies are often better placed to capitalise on growth opportunities than larger companies.

''They react more quickly to change and tend to enjoy proportionally greater benefits from increases in productivity and market share.'' Local companies that rely on domestic consumers, and infrastructure companies, are also favoured.

''These preferred companies are also expected to show an ability to sustain a competitive advantage through underlying virtues such as brand recognition, established distribution networks or advanced technical expertise,'' Mr Alexandroff said.

Stock selection in India and Asia will be done in Hong Kong. Stock picking for the European allocation of the fund will be done in London, and for the Latin American portion, in San Francisco.

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