Revealed: The China funds hit hardest by stockmarket slump


The New Capital China Equity fund has lost the most amount of money among China funds through the country’s recent stockmarket slump, according FE Trustnet.

The fund, which has £222m in assets and is managed by Mansfield Mok, has lost 32.57 per cent since the peak of the Chinese markets in June to 26 August.

China’s equity market was hit with turmoil in the summer with the Shanghai composite down around 40 per cent since its peak.

In July alone, the MSCI China Index was down by 10.93 and New Capital’s fund underperformed the index by 3.07 per cent.

GAM Star China Equity and Baring China Select funds also made the worst-performing China funds list, losing 32.46 per cent and 32.34 per cent respectively, FE data shows.

Lipper head of UK and Ireland research Jake Moeller says the funds “have a lot of industrial stocks and mid-caps in them, which are more volatile than other sectors, so the funds don’t have any defensive qualities”.

He adds: “All Chinese stocks have been badly hit by the market fall but if you had a larger caps exposure, for example, you’d have weathered the storm better.”

However, investors’ typical 3 to 4 per cent allocation to China means asset allocators are not likely to be as concerned with their fund choices in this market than other more popular sectors, says Moeller.

All of the 37 funds in the Investment Association’s China and Greater China sector lost money during the period. The Aberdeen Global Chinese Equity fund performed the best through the fallout, but was still down 19.97 per cent since mid-June, FE data shows.

The fund is closely followed by the Neptune Greater China Income and Legg Mason Martin Currie GF Greater China funds, which lost 20.69 per cent and 22.65 per cent respectively.

Baring Asset Management investment director for Asia Pacific equities William Fong says the growth decline in China is not justified by fundamentals.

He says: “The focus on particular economic data points misses the extent of the change in China’s economy in recent years and the emergence of new growth drivers there.”

Fong argues that it is possible to identify companies well placed to capitalise on market conditions over the next three to five years.

He says: “The recent volatility has created stockpicking opportunities for us, increased the potential for strong companies to act as consolidators and emerge stronger, and depressed valuation levels for investors.”

10 worst performing China funds (Source: FE Trustnet)

Fund name Between 12/06/15-26/08/15
New Capital – China Equity -32.57
GAM – Star China Equity -32.46
Baring – China Select -32.34
Allianz – China Equity -30.38
Jupiter – China -30.12
Guinness – China & Hong Kong -29.87
Baring – Hong Kong China -29.61
HSBC – Chinese Equity -28.58
GS – China Opportunity Portfolio Base Income -28.07
HSBC – GIF Chinese Equity -27.99