China is typically touted as a “long-term investment”, words which are rolled out anytime GDP growth misses investor expectations or domestic markets plunge.
So how have China funds with at least a ten-year track actually performed? There are 74 China and Greater China equity mutual funds available for sale in Hong Kong or Singapore with at least a decade-long track record.
FSA used FE data to pinpoint the most consistently successful funds in terms of cumulative performance as well as the number of years resulting in positive return.
Two mutual funds delivered more than 100% cumulative return in US dollars over the 10-year period ending 31 July 2017. They were the GAM Star China Equity Fund and the UBS China A Opportunity Fund. Both were launched in 2007.
First State has three funds on the list and they have a notable characteristic in common: All are managed or co-managed by Martin Lau, managing partner of First State Stewart Asia.
Top ten China equity funds by 10-year return
|Fund||10-year return (%)||Years of positive return||Years of return above sector average|
|GAM Star China Equity||159.7||5||6|
|UBS (CAY) China A Opportunity||121.4||6||7|
|Fidelity Greater China||97.2||7||7|
|First State Greater China Growth||94.1||7||7|
|Value Partners Chinese Mainland Focus||90.4||7||7|
|First State Regional China||90.0||7||7|
|Comgest Growth Greater China||85.0||8||6|
|Threadneedle (Lux) Greater China Equities||83.6||7||6|
|Schroder China Equity||80.0||5||5|
|First State China Growth||71.3||5||6|
Data: FE, cumulative return in US dollars, as of 31 July 2017
Three other funds among the top ten outperformed the sector average in seven out of the last ten calendar years: the Fidelity Greater China Fund, the First State Greater China Growth Fund and the Value Partners Chinese Mainland Focus Fund.
These three funds, plus the products from GAM and UBS, have beaten the sector average in the first seven months of 2017 as well.
The Comgest Growth Greater China Fund stands out as delivering positive returns in eight out of the ten calendar years, and outperforming the sector average in six.
While 19 out of the 74 funds delivered positive returns in eight of the last ten calendar years, only two funds — which did not make it to the top ten list — outperformed the sector average eight times out of ten: the Vontobel mtx China Leaders Fund, which delivered 57.3% over the past 10-year period, and the Legg Mason Martin Currie Greater China Fund, which returned 36.4%.