FSA compares the BGF China Fund and the UBS (Lux) China Opportunity Fund.
Investing across all share classes within the Chinese equities universe will provide more diversification benefits for investors, argues Cyrus Mui, Hong Kong-based head of product research for Asia at Vanguard.
FSA looked at the five China equity funds with the lowest average correlation to the performance of peer funds and found three with above average performance.
Most of the fund categories available for sale to investors in Hong Kong are well correlated, with the relative exception of China and India equity funds, FSA research suggests.
China equity funds have delivered, on average, the most bang for the buck in 2017, when measured in terms of alpha and risk-adjusted returns or the Sharpe ratio.
China funds are often measured by past performance, but information ratio is perhaps a better indicator of the manager’s ability.
Midea Group, Agricultural Bank of China and Kweichow Moutai are three companies held predominantly in well-performing China equity funds, while Tencent Holdings is held by many poor performers.
FSA compares the Fidelity China Focus Fund and the UBS China Opportunity Fund.
Over a ten-year period, GAM and UBS funds are the standouts but First State is exceedingly well represented, according to FSA research.
Chris Ruffle, co-founder of growth investor Open Door Investment Management, talks about the MSCI decision, Chinese banks, as well as thematic opportunities in the A-share market.