Herald small uk companies v. China Special Situation - zero corelation ?

Ciprico

You'd expect almost zero corelation between these two funds, I bought into both to add diversification to my predominantly global tracker portfolio, and I noticed whenever I looked these two funds appeared track each other.  I suppose it's just co-incidence...

Linton

Herald Investment Trust is classified as Global, not UK.  You would see a greater difference if you looked at a UK Small Companies Trust .  However given you are investing in equities you are not going to be able to diversify away the movements in the overall global markets.

Another factor is the graphs.  In your graph the companies appear to follow each other particularly closely because by adding SMT you have squeezed the funds you are looking at into less than half the graph.  Also, because the scale is linear, if a fund doubles in size in each of two successive years the increase in the graph in the second year is twice that in the first year: £100 grows to £200 shown as 0%-100% return, followed by £200 growing  to £400 shown as 100-300% return.  The effect over the long term is that major variations in the early years can be compressed nearly out of existance.