HEAD-TO-HEAD: Allianz versus FSSA

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Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

The FSSA Greater China Growth Fund “has an excellent long term track record,” said McDermott.

During the past 10 years it has returned 190.7% compared with 107.8% for the peer group, according to FE Fundinfo. It has similarly outperformed over five, three and one years – in both up and down markets (for example, over one year the fund was down 5.6% vs a loss of 20.7% for the FO Equity Greater China sector).

“This comes from cumulative strong calendar years with the fund outperforming in nine of the past 10 years,” said McDermott.

It has generated a 61.99% three-year cumulative return, according to FE Fundinfo, outperforming its benchmark MSCI Golden Dragon index (39.59%) and its Greater China equity peer average (50.61%). Its annualised volatility of 18.84% is lower than both its benchmark (19.72%) and peers (19.70%).

“Demand for the fund was so fierce that it was closed to new investments for four years in 2012, and it reopened to new investments in February 2016,” he added.

This fund, although high risk in absolute terms, is a lower risk way of obtaining exposure to China and while it has had some of the strongest returns in its sector, it has been less volatile than its peers and drawdowns have historically been significantly smaller, according to McDermott.

“You would expect it to underperform when the Chinese stock market is rising strongly, but to outperform in more moderate or uncertain environments.”

The Allianz China A Shares fund has much shorter track record with authorisation from the Hong Kong Securities and Futures Commission coming in 2019. “It has beaten its peer group since then however, and the fund has been available for longer in other regions of the world and, since the manager took over in 2016, the outperformance has been consistent,” McDermott said.

The fund has posted an impressive 146.77% three-year cumulative return, according to FE Fundinfo, better than the MSCI China A Onshore index (82.83%) and its China equity sector average (43.92%). Its annualised volatility over the same period is 23.27%, compared with 21.16% for the index and 19.06% for its peers.

“It’s rare to find such a high level of consistent outperformance and it indicates excellent research and stock picking. Given the nature of the A Share market, you would expect this fund to be volatile and to do well when the Chinese market is rising strongly, but also to underperform in uncertain markets,” said McDermott.

Discrete calendar year performance

Source: FE Fundinfo. Annual returns in US dollars.

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