What are we looking for?
How greater China equity funds fared in the Year of the Rabbit.
We ranked funds by the best returns since the start of the Chinese New Year on Feb. 3, 2011, to Jan. 20, 2012. The new Year of the Dragon began Monday. (U.S. dollar and duplicate versions of funds were excluded.)
What did we find?
The Year of the Rabbit did not turn out to be auspicious.
All funds lost money with Renaissance China Plus, a mutual fund, shedding the most with a 35-per-cent loss.
Two lower-fee, exchanged-traded funds (ETFs), however, emerged as the best relative performers. The iShares China ETF, which tracks 25 large companies, lost 6 per cent. Claymore China ETF, which holds 185 companies in the AlphaShares China Small Cap Index, shed 9.6 per cent.
Chinese stocks (including those listed in North America) took a big hit last year, partly on concerns about the euro-zone debt crisis and a slowdown in China's export-oriented economy. There were also worries about Chinese accounting standards in the wake of fraud allegations by short-seller Carson Block against Sino-Forest Corp., but which were denied by the forestry company.
"Basically, people were running away from risk" last year, and lots of smaller-company stocks in the Claymore ETF got pummelled, said Kevin Carter, a co-founder of AlphaShares LLC, a creator of indexes. The downdraft in Chinese equities also stemmed from so-called "window-dressing" by portfolio managers who often sell stocks with large losses in their funds at year-end.
In the first three weeks of this year, however, all the China funds are posting strong returns. The Claymore China ETF was leading the pack with a 13-per-cent gain to last Friday. "A lot of the Chinese companies that were badly beaten down have bounced up sharply," Mr. Carter said. "The artificial, window-dressing pressure is off the stocks."
Market observers also suggest that the rally is being fuelled by the Chinese economy growing more strongly than expected in the fourth quarter, and expectation that the Chinese government will introduce more economic stimulus this year to spur its economy. It's early days, but it looks as if investors are betting the Year of the Dragon will breathe more life into Chinese stocks.
HOW GREATER CHINA EQUITY FUNDS FARED IN THE YEAR OF THE RABBIT
|Assets||Feb. 3/11||YTD||To Dec. 31, 2011|
|Fund||MER||($ mil.)||to Jan. 20/12||2012||6 months||1 year||3 years||5 years||10 years|
|iShares China Index||0.85||22.3||-5.99%||10.43%||-14.22%||-15.86%|
|Claymore China ETF||0.71||6.5||-9.64%||13.03%||-19.52%||-19.15%|
|Investors Greater China A||2.73||121.6||-11.69%||6.72%||-15.11%||-17.83%||-0.16%||-4.64%|
|HSBC Chinese Equity-I||2.69||197.0||-12.50%||8.61%||-16.80%||-19.35%||1.17%||-4.58%|
|AGF China Focus Class||3.11||164.6||-13.05%||10.19%||-19.75%||-20.71%||0.85%||-4.82%||6.48%|
|Fidelity China A||2.60||35.5||-13.75%||7.44%||-16.79%||-19.44%||5.41%||0.34%|
|Pro FTSE RAFI Hong Kong China Idx-A||2.03||3.3||-16.41%||7.07%||-13.30%||-19.17%||8.29%|
|Manulife China Class||3.10||46.3||-18.08%||7.64%||-19.13%||-22.25%||2.54%||-4.05%|
|BMO Greater China Class||2.77||76.2||-21.75%||6.10%||-22.35%||-24.58%||4.95%||-3.47%|
|BMO GDN Greater China Cls Ad Srs||2.78||2.4||-21.77%||6.10%||-22.36%||-24.60%||4.97%|
|PowerShares Golden Dragon China Cl A||2.00||1.9||-22.17%||10.30%||-25.13%||-26.32%|
|BMO China Equity Hedged ETF||0.71||9.2||-23.58%||9.85%||-28.33%||-26.40%|
|Renaissance China Plus||3.30||100.9||-34.87%||6.59%||-28.62%||-37.76%||3.31%||-2.23%||3.21%|
|Hang Seng Total Return Index||-13.00%||-17.92%||1.79%||-4.15%||0.35%|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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