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Keeping ahead in China: three most consistent managers revealed

Keeping ahead in China: three most consistent managers revealed

China has experienced a rollercoaster in investor sentiment over the past year, going from the EM powerhouse to a worry for asset allocators as the economy begins to slow.

Talk of a hard landing appears to have subsided but fears over China’s longer-term strength remain.

While the country is moving onto a slower, structural growth footing, how have the fund managers fared? Here Citywire Global takes a closer look at the most consistent managers running dedicated country funds in the sector over the five years to the end of March 2014.

Out of this class there are 30 fund managers who can boast a five-year track record, with the average manager returning 67.4% in absolute terms over this period.

This compares to a rise of 83.5% by the most commonly held benchmark, the MSCI Zhong Hua TR USD, over the same period.

While a number of managers can attest to outperforming both these measures, only two funds have beaten the average peer in each of the past five years. So who are they?

Alexander Klinkman/Jens Biertumpel - Mont Blanc

Fund: Mont Blanc China Opportunity Fund B

Greatest period of outperformance vs. average manager: +20.38% in 2013/14

The Zurich-based pair of Alexander Klinkman and Jens Biertumpel combine the strongest performance in absolute terms with a solid showing in each of the past five years.

The Citywire A-rated duo returned 172% in absolute terms over the five year period, which is nearly treble the average manager performance and nearly double the index.

It invests primarily in the China H-Shares market and has its largest allocation to Beijing-based research and development group Kingsoft, while investment holding company HC International is the second biggest single position.

Speaking to Citywire Global in March of last year, the two managers said their top down approach had helped dictate investment ideas, while a bottom-up approach to the consumer discretionary sector had also proven effective.

Xian Quanqiang, First State

Fund: First State China Focus I

Greatest period of outperformance vs. average manager: +13.12% in 2009/10

The only manager able to vie with the Zurich-based pair for consistency is fellow Citywire A-rated manager Xian Quanqiang, who runs the First State China Focus fund.

Boasting equally strong performance in absolute terms – having returned 127.9% over the analysis period – Quanqiang has achieved this through running a concentrated fund of 23 stocks.

This is while having a significant overweight to the IT sector, which makes up 24% of the fund compared to a benchmark allocation of 12.5%. Quanqiang holds almost half the benchmark allocation to financials, where he has 19%.

Quanqiang has run the fund since January 2008 and is supported by China equity specialist Martin Lau, who acts as a deputy on the First State China Focus fund.

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