For Tulloch the most straightforward response to this scenario is to own gold. Some 10% of his fund is now in gold stocks. He said there is likely to be lower buying by the Chinese government of US Treasuries in the years to come, with gold taking up the slack. 'One of the measurements we study quite closely is the domestic gold buying in China and India. At the moment it looks quite stable but we think that as inflation rises it could grow quite sharply,' he said.

Tulloch is also responding to these threats by buying very cautiously positioned Asian companies. This has hit his performance in the short term as he has avoided the momentum-driven stocks that have led the rally.

Over the past year, his First State Asia Pacific fund has risen by some 31.21% compared to a rise of 35.64% from the MSCI AC Asia Pacific ex-Japan index in sterling terms. However, his long-term performance record remains strong. Over five years the fund has risen by some 144.76% compared to a rise of 118.4% in the benchmark index.

Tulloch's own focus is on the long term and he reveals he recently changed his team's remuneration policy so that none of it is structured over one year. Previously some 10% had been linked to one-year performance. It is now all based over three to five years and the team is required to reinvest half of what they receive into their own funds for as much as five years as well.

David Fuller's view Edinburgh-based Angus Tulloch is one of the most respected Asian equity managers.

The new remuneration policy described above makes sense and should be in the interests of the funds' investors.