In the category of China equity funds registered for sale in Hong Kong, which contains 107 products, the best performing fund year-to-date is in negative territory, according to FE data.
The Invesco China Focus Equity Fund’s performance is -1.49%, the highest return in the category to 5 September.
The worst performer was the BOCIP China-A Small and Mid Cap Fund with -31.5% return, FE data shows.
It is a stark reversal from the same period in 2017, when both of those funds, the MSCI China Index and the category were all positive (charts below).
The Invesco product has an 18% exposure to “software & services” which comes under the 30% exposure to the TMT sector. Alibaba is the top holding, accounting for 9% of the portfolio.
Portfolio manager Mike Shiao, in his latest commentary, said the reasons for downward pressure were “trade tariffs risk between the US and China, economic activity disappointed and the currency weakened against the US dollar”.
However, he likes domestic consumption.
“We remain focused on companies with sustainable leadership and competitive advantages through a purely bottom-up investment approach. Our stock selection has led to meaningful exposure in consumer-related sectors.”
Last month Blackrock said it was taking down its China allocation, citing trade war rhetoric and tariffs, as well as slowing economic growth.
“We have reduced our position in China from an overweight position toward a more neutral one,” said Wenjie Lu, China investment strategist at Blackrock.
2018 year-to-date: Best and worst China fund vs the MSCI China and the category
Quite a change from the same period last year
