The funds riding the China rebound

Chinese equity funds have soared alongside the recent volatility in Chinese stocks, according to data compiled by FSA.

In late September, the Chinese government announced a series of measures to stimulate the country’s faltering economy.

The market reaction was immediate, when over a span of just a few weeks, the Hing Kong’s Hang Seng Index rallied over 32% and China’s CSI 300 index surged over 34%.

As investors digest the full extent of the proposed stimulus measures, markets have since cooled off and retraced some of the gains over the past few trading sessions.

Despite the recent pullback, the Chinese equity market indices have posted positive year-to-date gains after a multi-year bear market which began in 2021.

Performance of Chinese stock market indices year-to-date

Chinese equity funds have been clear beneficiaries of the recent rally, where they experienced inflows of almost $40bn last week, according to data from EPFR.

However, not all funds have rallied as hard as the broader indices over the past month, according to data from FE fundinfo.

Below, FSA highlights the top 30 performing actively managed Chinese equity funds available for distribution in Hong Kong and Singapore*.

The HSBC Jintrust Large Cap Equity Securities Investment Fund tops the list with a 33.3% return over the past month. This $205m fund invests in mainland Chinese large-caps blue chip companies that are industries in their industries.

It is managed by Liangchao Min and at the start of September, had more than half of its portfolio invested in the manufacturing sector. It is benchmarked against the CSI 300 Index.

The Matthews China fund also stands out as a top performer among those benchmarked against the MSCI China index.

It has top holdings in the country’s largest technology firms, inclduing Tencent Alibaba Group and Meituan. Lead manager Andrew Mattock runs a relatively high concentration portfolio with just 60 positions.

Meanwhile, the giant $3.8bn JPM China fund stands out with a 30.1% return over the past month.

Managed by JP Morgan Asset Management’s Rebecca Jiang and Li Tan, the fund follows a blended strategy, combining both value and growth investing, with a focus on large-cap stocks.

When it comes to the top performing ETFs, those tracking technology focused indices such as the ChiNext or Hang Seng TECH index outperformed the broader indices. Below are the top 20 performing passive exchange-traded-funds (ETFs)

The VanEck Vectors ChiNext ETF stands out with a 43.3% return over the past month, almost double the wider market. Its concentrated positions in fast-growing tech firms listed in Shenzhen helped propel its performance.

After tech indices, Chinese large cap-focused ETFs outperformed the wider market. Large caps are sometimes favoured by foreign investors due to increased liquidity.

For example, BlackRock’s iShares China Large-Cap ETF, which has $4.3bn in assets, outpaced its counterpart, the $1.8bn iShares Core MSCI China ETF by over 100 basis points.

* The top-performing funds were measured in US dollar terms according to data from FE analytics. The performance period was one month ending 15/10/2024. The data only considered funds that fall under the China, Greater China and Hong Kong equity sectors within the Hong Kong SFC Authorised Mutual or Singapore Mutual fund markets based on data from FE fundinfo. Leveraged ETFs were excluded.