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Year of the rooster: Chinese equity standouts

Year of the rooster: Chinese equity standouts

It's the year of the rooster, which spells fidelity and punctuality, according to the Chinese zodiac.  

But are these the traits that will define the next 12 months in the Chinese equity market?

In 2016, the Spring Festival celebrated the year of the monkey and the turbulent year that followed hinted at the clever, mischievous characteristics of a monkey.  

As volatility within the market quietens, three portfolio managers have emerged ahead of their peers.

There are currently 25 managers running dedicated Greater China equities funds with a three-year track record to the end of December 2016.

The average manager returned 14.28% over this timeframe, while the benchmark MSCI Golden Dragon TR USD returned 21.30% over this period.

Here are the three managers leading the way in the sector and outperforming in Chinese equities.

3 - Zhi-Hua Wang, CSOP Asset Management

Fund managed: China SDD – China New Balance Opportunity I USD Acc

Three-year total return (January 2014- December 2016): 30.50%

Ranking near the top of the top of the board is deputy CIO and portfolio manager at CSOP Asset Management, Zhi-Hua Wang, who joined the firm in 2010.

The Citywire A-rated manager runs the fund, which had a total size of $178.06 million by the end of November 2016.

In his November investment report, Wang explained that the fund hedged systematic risk by using Hang Seng Index Futures. However, the position was closed by the end of the month as markets stabilised after the short-term market panic of the Trump win.

In terms of country allocation, investments in Hong Kong make up 71% of the portfolio while the US allocation makes up 29%.

 

2 - Frank Yao, Neuberger Berman

Fund managed: Neuberger Berman China Equity USD A Acc

Three-year total return (January 2014- December 2016): 33.87%

Clinching second place in the Chinese equity leader board is Citywire AA-rated Frank Yao, who runs the Neuberger Berman China Equity fund alongside Lihui Tang and has over 20 years of experience in the industry.

Launched in 2009, the fund has a total of $723.16 million in assets under management.

The Ireland-domiciled fund’s largest exposure is to the well-known investor favourite, Tencent Holdings, which represented 9.54% of the fund at the end of December 2016.

Hong Kong Red Chips form a majority of 29.52% of the fund’s market exposure, with Domestic Chinese A shares representing 28.0%.

 

1 - David Raper, Comgest

Fund managed: Comgest Growth Greater China EUR Acc

Three-year total return (January 2014- December 2016): 46.70%

In first place over three years, the sector’s best player is David Raper from Comgest, who runs the Comgest Growth Greater China, which has total net assets across all classes of €177.03 million.

The Citywire AAA-rated manager has allocated 36.8% of the portfolio holdings to the information technology sector.

In terms of geographical allocation, 70.0% of the portfolio is invested in Chinese stocks and 24.0% in Taiwanese stocks.

The fund’s top holdings include Taiwan Semiconductory Manufacturing Co, representing 6.9% and China Life Insurance at 5.9%.

The biggest contributor to the fund was Kweichow Moutai Co at 0.53% by the end of December and the largest detractor was Vipshop Holdings Ltd.

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