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Top performing China equity managers revealed

Top performing China equity managers revealed

As the country's slowing GDP growth continues to concern global investors, Citywire Global has dug into our data to find out which managers have outperformed in this increasingly integral market.

There are 34 managers with a three-year track record in the China equity sector, according to Citywire data. Of these, 12 have achieved a positive return over this period.

These managers also bettered the most commonly held benchmark, the MSCI China TR, which rose 0.6% over this period. Meanwhile, a total of 15 beat the average manager performance of -3.04%.

Looking closer at the data, there are five managers who managed to return greater than 10% over this three year analysis period.

So who are the stand-out managers in the Chinese market?

Manager: Xian Quanqiang

Fund: First State China Focus I

Three year total return (August 2009 to August 2012): 32.43%

The top performing manager in the China equity space is one of two First State managers to have posted strong returns over the past three years.

In the 21-stock First State China Focus fund, Xian has focused on IT names and has a strong overweight to this sector compared to the benchmark. The fund holds 23.9% in this sector compared to a benchmark allocation of 6.7%.

The largest holding in the fund is China Telecom (10.4%), which makes up a large proportion of the 13.7% allocation to Chinese telecoms sector as a whole. Xian has run the $146 million fund since its launch in January 2008.

Manager: Martin Lau

Fund: First State China Growth II

Three year total return (August 2009 to August 2012): 29.72%

Hot on Xian’s heels is First State colleague Martin Lau, who helms the blockbuster fund First State China Growth. The fund currently has $4 billion in assets under management and has around 55 holdings.

Unlike Xian’s approach, Citywire AA-rated manager Lau has focused on utilities (16.2%) and consumer staples (12.8%), while running a substantial underweight in financials, where he holds 21.2% below the benchmark's allocation to the sector.

In his latest factsheet, Lau said a more difficult operating environment created by the slowdown in Chinese growth should give way to him adding cyclical stocks when they achieve an attractive valuation.

Manager: Thomas Schaffner

Fund: Vontobel Fund China Stars Eq I USD

Three year total return (August 2009 to August 2012): 12.37%

Some way back from the leading First State duo is Vontobel’s Euro Stars AA-rated manager Thomas Schaffner. The Swiss born manager is the third best performer in terms of total returns over the past three years.

Schaffner has been lead manager on the fund since co-manager Jiazhi Chen Seiler stepped down in July 2011. Unlike the two previous managers, Schaffner has a strong allocation to financials, which account for 40% of his portfolio.

According to the fund's most recent available factsheet, Schaffner’s three biggest holdings are CNOOC (9%), China Mobile (8.8%) and China Construction Bank (7.9%).

Honourable mentions

There are two other managers who have returned over 10% in this period.

They are BNP Paribas’ Patrick Kwok Leung Ho, who has returned 11.80% on the BNP Paribas Flexi III Equity China Ilios fund, and Anthony Cragg, who returned 11.61% on the Wells Fargo (Lux) WW China Equity I USD fund.

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