The Chinese year of the rooster gave investors plenty to crow about.
For the 12 months to the end of 2017, the MSCI China index was up a staggering 51%, more than doubling the 21.8% return of the S&P 500.
This good fortune has carried into January too, with China outpacing the US in the first month of 2018, 13.6% versus 5.7%.
But the year of the dog is now upon us – Chinese New Year is on February 16 – and investors will be hoping that it does not live up to its name and deliver disappointment.
For those who invest based on more than just what animal the year is named after – hopefully that’s everyone reading this – we have picked out the 11 best China Region managers by risk-adjusted returns over the past three years.
The table groups together a diverse set of managers, who hold a range of different views on what to expect in China this year. Some are in the mood to buy, while others are concerned about signs of an economic slowdown, excessive borrowing in the corporate sector or the perennial debate around the government-controlled stock market.
She believes that investors have shrugged off these concerns and that the market has taken a constructive view on the Chinese government’s efforts to contain leverage and rein in overcapacity.
She ranks fourth out of 16 managers in the category for her risk-adjusted numbers. Her fund also ranks fourth out of 18 for total returns, having returned 50.6% over the past three years to the end of 2017. Meanwhile, the average fund was up 42.2%.
Among its top holdings are not only familiar names within the Chinese tech space, such as Tencent and Alibaba, but also big players in the financial sector, including Chinese insurance firm Ping An Insurance and the state-owned China Construction Bank.
‘The fund’s underweight position in telecommunications and industrials, its overweight position in the consumer staples sector, as well as security selection in the healthcare and financials sectors aided relative performance,’ Huang wrote in her most recent commentary.
‘We maintain our overweighting in areas with promising long-term growth opportunities, such as information technology, internet and consumer discretionary sectors. Overall, we continue to invest in China on the basis of long-term, secular growth ideas.’
The team on the $77.3 million John Hancock Greater China Opportunities fund takes a similar view.
Leveraging the on-the-ground Asia experience of managers Ronald Chan and Kai Kong Chay, the fund has returned 46% over the past three years to the end of 2017 and ranks seventh out of 18 Citywire-tracked China Region funds.
Like the Columbia fund, the Hancock offering has big positions in information technology (42%) and financials (20%), although the latter is an underweight. It also counts a trio of tech behemoths – Tencent, Alibaba and Taiwan Semiconductor Manufacturing Company – among its top holdings.
China’s booming tech industry is hard to avoid for fund managers, even those who were investing in the region well before the sector’s emergence.
While it has an overweight to tech, 38% versus 30%, it is different to other offerings as it also has a big bet on the consumer discretionary sector – 24% versus 11.6% for the index.
This is reflected in its top 10 holdings, which include a number of automobile manufacturers such as Geely Automobile Holdings, Guangzhou Automobile Group and Nexteer Automobile Group.