China was one of the worst performing markets globally, with the MSCI China Index returning -18.75% in US dollar terms last year, which compares to the -14.22% performance of the MSCI Emerging Markets Index.
However, this did not stop global investors from buying into the asset class. In Europe, for example, funds investing into China saw net inflows of $5.33bn last year ending November, according to data from Morningstar Direct. In Asia, Greater China funds were also the second most popular category in Malaysia.
Hong Kong universe
Not one of the 49 Greater China equity funds registered for sale in Hong Kong returned positive in 2018, according to FE data.
In Hong Kong, the Greater China equity category was down 18.85%. About 49% of Greater China funds outperformed the aggregated sector.
The best performing fund was the ICBC China and Hong Kong Vision Fund, which returned -8.96% during the year.
The fund, which has a Morningstar analyst rating of Silver, has nearly 50% of its assets in financial services firms, which is a strong overweight versus the 23.5% of its benchmark index, the MSCI China Index, according to Morningstar data.
Best performing Greater China funds in Hong Kong
Source: FE. In US dollars
On the flipside, the worst performing Greater China equity fund in Hong Kong was the CSOP China New Balance Opportunity Fund. Unlike its category peers, the product has a sizable allocation to real estate at 22.75%, which compares to Morningstar’s peer average of 5%.
The fund’s volatility was also the highest during the period (32.93) in the category, which compares to the peer average of 21.83, according to FE data.
Worst performing Greater China funds in Hong Kong
Source: FE. In US dollars
Singapore universe
In the Singapore universe, there are 48 Greater China funds that are available to accredited investors, according to FE data. Around 45% of the products outperformed the sector aggregate performance (-19.68%) in the Lion City, according to FE data.
The best performing Greater China fund in Singapore is the Templeton China Fund, which is also on Hong Kong’s top five list. The largest sector in the fund is financials, which accounts for 21.57% of the product’s assets, according to the fund factsheet.
Best performing Greater China funds in Singapore
Source: FE. In US dollars
The concentrated product, which holds 45 positions, has nearly 60% of its assets invested in its top 10 holdings. Like most Greater China products, its highest sector allocation is in financials (21.6%), which is slightly underweight compared to its benchmark index, the MSCI Golden Dragon Index (24.19%), according to the fund factsheet.
The Schroder ISF Greater China Fund, which is the fourth best-performing product in the category in the Hong Kong universe, also ranks in the top five in Singapore.
The worst performing fund is the GAM Star China Equity Fund, which returned -34.89% in 2018.
It was also the most volatile fund in the category – at 32.45, which compares to the peer average of 22.18. Three of the worst performing funds in the Hong Kong universe, which are managed by Hamon, JP Morgan Asset Management and Allianz Global Investors, are also among Singapore’s top five worst performers.
Worst performing Greater China funds in Singapore
Source: FE. In US dollars
