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IA China/Greater China sector tops returns in July

Eight of the 10 highest-performing funds came from the sector, with Matthews China returning 10.43%.
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The IA China/Greater sector dominated returns in July with the index up 7%, according to data from FE fundinfo.

After an underwhelming post-Covid reopening, Chinese markets rose last month on the back of stimulus to boost domestic consumption and further measures to boost its property sector.

Eight of the top 10 funds over the month were in the sector, with Matthews China leading the way with 10.4% returns.

The two non-China funds among the highest performers were JP Morgan Africa Equity (10.4%) and CT European Real Estate Securities (9.2%).

Funds – One month (top ten)Return %
Matthews China+10.43
JPM Africa Equity+10.4
SVS Aubrey China+9.99
Nomura China+9.92
Allianz China Equity+9.85
Fidelity China Innovation+9.51
Templeton China+9.39
CT European Real Estate Securities+9.22
Invesco PRC Equity+8.82
Janus Henderson Horizon China Opps+8.82
Source: FE Fundinfo

Other sectors among the highest one-month performers included global emerging markets, which returned 3.7%, financials & financial innovation (3.65%) and commodities (3.49%).

Fixed income sectors occupied each five of the worst performing sectors, with USD Government Bonds down 1.27%, picking up the wooden spoon as the worst performer in July.

A falling dollar and a mild decline in yields saw USD Mixed Bond, and USD Corporate bond also post negative returns.

Fairview Investing director Ben Yearsley said: “Despite being a quiet month on the news front, July was a decent month for markets with most major indices rising – indeed Nasdaq has been on the strongest run in a few years with five straight months of gains. Hopes are growing that recession has been avoided in the US, despite virtually all economists predicting one.”

Fund Sectors – 1 month (top five)Return %
China/Greater China+6.95
Global Emerging Markets+3.7
Financials & Financial Innovation+3.65
Commodity/Natural Resources+3.49
Latin America+3.25
Source: FE Fundinfo

He added: “I’m not sure there is a silly season now as the back end of July and into August is dominated by half-year results season and, as a broad brush statement, it feels okay in corporate land.

“Buybacks continue apace and dividend increases, especially in the UK, are commonplace. As mentioned, the much predicted recession has still failed to materialise despite an historic pace of rate hikes.”

Yearsley also noted there was no discernible trend among the worst-performing funds as they came from a range of sectors. The Lazard Developing Markets Equity Fund returned 6.9%, while Active Solar was down 5.4%.

Funds – 1 month (bottom ten)Return %
Lazard Developing Markets Equity-6.92
Active Solar-5.39
JSS Sustainable Equity Future Health-4.77
Abrdn Strategic Investment Allocation-4.0
Oxeye Hedged Income-3.73
Schroder Tellworth UK Dynamic Absolute Return-3.63
GS Asia High Yield Bond Portfolio-3.38
Invesco Japanese Smaller Companies-3.21
Alger Dynamic Opportunities-3.06
FF China High Yield-2.95
Source: FE Fundinfo

This story first appeared on our sister publication, Portfolio Adviser.

Part of the Mark Allen Group.