E Fund outperformed the sector average in three out of four full calendar years since its inception. Notably, it bettered the average by 9.5% in 2014, 14.2% 2015 and 7.1% in 2016. CMS outperformed the sector in two out of the four years, by 0.1% in 2014 and 4.4% in 2015.
The difference in the two funds’ performance before 2016, “is not about the bad performance of CMS, but about the good performance of E Fund,” said Ng.
| 2013 | 2014 | 2015 | 2016 | 2017 YTD | |
| E Fund Rmb Fixed Income | -0.06 | 12.09 | 13.24 | 0.43 | -0.12 |
| CMS China Opportunitied Flexifund | -2.02 | 2.70 | 3.49 | -7.51 | -7.07 |
| Category: RMB Fixed Income | 4.48 | 2.63 | -0.93 | -6.70 | 2.90 |
“The key underperformance of CMS came in 2016,” said Ng. “At the time of the large redemption in May 2016, they needed to liquidate most of the assets in the fund, which is very unusual.”
“The manager sold interest rate bonds and high grade credit bonds to meet liquidity demands,” stated the fund’s 2016 annual report. “Since then, the manager allocates most positions on convertible bonds with high level of liquidity.”
The sudden selling of positions to meet liquidity demands hit the CMS fund hard. “There could have been a large trading loss,” Ng said.
| E Fund RMB Fixed Income Fund | CMS China Opportunities Flexifund | Category: RMB Fixed Income | |
| 1 yr Return | -3.19 | -16.35 | -3.23 |
| 3 yr Return | 3.95 | -5.63 | -0.73 |
| 1 yr Volatility | 1.64 | 5.20 | 3.26 |
| 3 yr Volatility | 2.67 | 3.33 | 3.47 |
| Alpha | 7.05 | -3.27 | |
| Beta | 0.22 | 0.09 | |
| Information Ratio | 2.02 | -0.6 | |
| Sharpe Ratio | 1.26 | 0 |
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