Bottom 10 China equity funds in Q1 2017

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China-focused funds in Hong Kong had stellar performance during the first quarter of this year. According to FE data, the sector returned 8.79%, with the top 10 best performing funds returning more than 14%. That is in stark contrast with the sector’s negative returns of 8.38% during the full year of 2016, according to FE data.

“The first quarter of this year saw better investment sentiment due to improving Chinese economic data as well as the stabilising renminbi,” Luke Ng, senior vice president of research at FE Advisory Asia, told FSA.

Adding to the bullish sentiment are positive global economic figures, the expectation of tax cuts and deregulation by the Trump administration in the US, and the receding worries over the far-right victory in the upcoming elections in Europe, he said.

He also noted that the funds that performed best during the first quarter were offshore Chinese equities-focused funds. (For the top 10 best performing China equity funds, click here)

“That explained why A-share focused funds mostly ranked amongst the bottom,” he said.

Indeed, the MSCI China Index, which represents the behaviour of the offshore market, returned 12.93%, while the CSI300 Index, which is for the onshore market, returned 5.31% during the first quarter, according to data from FE.

In Hong Kong, there are 61 China-focused funds, excluding exchange-traded funds, index funds and tracker funds, according to FE data. The sector has more than $18bn in total assets. The funds’ average ongoing charges (OCF) are around 2.03%.

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