When an economy gets caught into such a downward spiral, it is not easy to get out of this muddle of deflationary trap. Japan will know it better. It is three decades since Japanese economy got into this deflationary entanglement. They are yet to find a way out. If right policy tools are not used, China may be staring at a similar fate.
The fund was launched in Sep07 just as the markets were reaching manic highs. However, we exercised caution and refrained from fully deploying our capital, keeping a significant portion in cash. When the crisis struck, we were well prepared with only 20-25% of our fund deployed.