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China champion: most consistent equity manager over five years

China champion: most consistent equity manager over five years

The Chinese government formally announced its 13th Five Year Plan on March 16 with the stated aim of achieving 6.5-7% growth by 2020.

In a wide-ranging manifesto, China’s Premier Li Keqiang announced plans to cut high debt, streamline state-owned enterprises and also enact reforms within the country’s financial system.

While market commentators have acknowledged the muted tone of the announcements, others believe the latest pledges strongly reflect the reality of slowing growth and the need for stability.

Given short-term scares, such as the China-led market correction last August and stock market shocks at the start of 2016, will this be enough to re-engage investors and provide an accommodative environment for investors?

With that in mind, Citywire Selector has taken a closer look at the top-performing managers in the dedicated Equity – China sector over the past five years to find the stand-out performers.

There are currently 83 managers with at least one year’s experience in this area, while 41 have track records back to February 2010. Over this longer timeframe, the average of these lost 10% in US dollar terms, while the MSCI China TR USD fell 8.87%.

However, one fund manager has outstripped both the average performance and the index, posting the strongest five-year performance in absolute terms, while also staying ahead of the pack in each individual 12 month period. Let’s find out who is the most consistent manager in the sector.

Bin Shi, UBS AM

Funds: UBS (CAY) China A Opportunity A/UBS (Lux) Eq Fd - China Opportunity (USD) P-acc/UBS (Lux) Inst SICAV II-China A Opportunity FA

Five year total return (February 2011-February 2016): 29.16%

Best year of outperformance vs. average: +17.95% in 2015/16

Citywire A-rated Bin Shi is head and shoulders above his competition, with an exceptional outperformance and also the honour of being the only manager to consistently beat the peer group. This is while running three funds in the sector, two being Luxembourg-domiciled and one Cayman Island-domiciled.

The largest of these funds is the $1.44 billion UBS Equity – China Opportunity fund, which Bin Shi has run since 2010. In this fund, Shi has focused largely on financials, with the sector accounting for 28% of allocation at the end of February, which was ahead of IT (18.8%) and consumer discretionary (17.9%). Cash currently accounts for 10.3% of the fund.

Shi’s best period of outperformance came during one of the most tumultuous for China equity investors. Over the 12 months to the end of February 2016, a period which includes the summer correction and the problematic start to the year, Shi lost 2.2%, which compares to an average manager loss of 20.1%.

His most narrow period of outperformance was right at the beginning of the analysis period. In the 2011/12 period, Shi lost 8.91% which was narrowly ahead of the average manager, who lost 8.93% over the same one-year period.

Speaking to Citywire Asia, Citywire Selector’s sister site, in early 2014, Shi said he was moving his portfolios to focus on the country’s ‘new economy’, which was set to see him invest more heavily in IT, healthcare and consumer. These allocations have increased steadily over this time period.

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