WHAT ARE WE LOOKING FOR?
Funds playing China's booming economy that are avoiding plenty of red ink.
With the 2008 Beijing Olympics opening in a couple of weeks, the euphoria over this event is not being carried over to the Chinese stock market.
The bubble finally burst last fall, sending the Shanghai stock exchange composite index plunging 53 per cent by yesterday from its peak of 6,092.06 points in October.
TODAY'S SEARCH
We examined the China stock funds (in the miscellaneous category) as well as both the Asia-Pacific and Asia Pacific ex-Japan equity funds, which have invested in Chinese or Hong Kong companies.
Many firms offering A-shares on the Shanghai exchange, which are only open to Chinese citizens and some institutional investors, also have H-shares trading on the Hong Kong Stock Exchange. H-shares typically trade at a discount to their mainland peers. There are also Hong Kong-incorporated companies that do business in China.
We focused on the one-year and compounded annual returns for three and five years. We excluded funds with less than a one-year record; denominated in U.S. dollars, and other classes of the same fund.
SO WHAT DID WE TURN UP?
One lonely fund.
The $2.9-million PRO FTSE RAFI Hong Kong China Index-A fund, which was launched in April, 2007, was the only one in the black for the year ended June 30th. It was still up 2 per cent.
Unlike conventional index funds whose company weightings are based on market value, the stock weightings in this fund are tied to fundamentals like sales, cash flow, book value and dividends.
With the fundamental-index methodology, investors may "not get hit as hard as certain portfolios or the market" in pullbacks, says Nikki Chan, a research analyst at Pro-Financial Asset Management.
While the fund was also up 13.8 per cent for the 12 months ended May 31, it is not clear whether it can continue to stay in the black at the end of July.
In contrast, the $103.2-million Excel China Fund, which garnered an eye-popping 83.2-per-cent return in calendar 2006, plummeted 22.4 per cent for the year ended June 30. Over five years, it still has managed a strong average annual return of 15.7 per cent.
The fund, which has the best five-year record, is the $345.4-million AGF China Focus Class, managed by Tokyo-based Nomura Asset Management. It has racked up an average annual return of 21.1 per cent.
And for now, the three-and five-year average annual returns of all the funds are still nicely in the black.
| China & Asian funds | |||||||||||
| As of July 24 | As of June 2008 | Annual returns | |||||||||
| Assets (mil) | YTD % | 1-yr % | 3-yr % | 5-yr % | 2007 % | 2006 % | 2005 % | ||||
| Fund name as of June 2008 | MER | return | return | return | return | return | return | return | |||
| Pro FTSE RAFI Hong Kong China Idx-A | 2.9 | 1.60 | -16.43 | 2.00 | |||||||
| Fidelity ChinaA | 39.1 | 2.80 | -23.65 | -4.02 | 39.26 | ||||||
| GGOF Asian Growth and Income-M | 289.0 | 2.73 | -7.90 | -4.19 | 7.57 | 5.97 | 20.33 | 10.96 | |||
| Fidelity AsiaStar A | 95.2 | 2.70 | -9.38 | -5.57 | 6.28 | ||||||
| AGF China Focus Class | 345.4 | 2.96 | -19.71 | -6.36 | 20.29 | 21.06 | 30.53 | 67.62 | 8.55 | ||
| Mackenzie Focus Far East Class A | 106.4 | 2.67 | -15.48 | -6.93 | 10.46 | 11.66 | 17.52 | 26.39 | 6.92 | ||
| Fidelity Far East-A | 71.2 | 2.67 | -19.52 | -7.17 | 15.50 | 17.05 | 15.72 | 39.37 | 21.98 | ||
| Lutheran Life Far East Equity (Mk) | n/a | 2.80 | -15.62 | -7.20 | 10.24 | 10.40 | 17.10 | 27.76 | 6.51 | ||
| Investors Pacific International-C | 188.9 | 2.89 | -18.29 | -7.97 | 12.93 | 15.97 | 18.95 | 32.46 | 11.76 | ||
| Manulife China Opportunities Class | 91.2 | 2.88 | -19.26 | -8.28 | 21.46 | 24.25 | 72.86 | 8.79 | |||
| Investors Greater China C | 51.9 | 2.91 | -22.00 | -8.74 | 29.49 | ||||||
| HSBC AsiaPacific-I | 52.5 | 2.36 | -15.73 | -9.06 | 11.07 | 14.93 | 13.54 | 29.86 | 17.05 | ||
| Renaissance Asian | 10.3 | 3.24 | -24.35 | -9.32 | 6.36 | 9.79 | 15.00 | 7.82 | 20.98 | ||
| CI Pacific | 110.4 | 2.32 | -16.72 | -9.85 | 7.66 | 11.60 | 4.17 | 16.87 | 20.75 | ||
| National Bank Asia Pacific | 6.7 | 2.71 | -9.90 | -10.10 | 3.02 | 9.43 | -5.57 | 13.53 | 14.11 | ||
| Renaissance China Plus | 120.2 | 3.22 | -24.82 | -10.36 | 13.87 | 14.87 | 28.64 | 51.83 | -3.20 | ||
| TD Asian Growth | 175.5 | 2.76 | -21.35 | -10.38 | 14.83 | 14.51 | 20.36 | 39.80 | 16.86 | ||
| Altamira Asia Pacific | 65.8 | 2.68 | -9.57 | -10.72 | 2.65 | 9.11 | -7.06 | 13.70 | 14.15 | ||
| CIBC Asia Pacific Index | 19.4 | 1.10 | -9.85 | -11.91 | 5.86 | 9.58 | -4.91 | 14.28 | 18.14 | ||
| CIBC Far East Prosperity | 118.7 | 2.90 | -19.13 | -12.46 | 2.18 | 6.99 | 3.22 | 4.31 | 20.23 | ||
| AGF Asian Growth Class | 60.9 | 2.99 | -14.30 | -12.50 | 10.70 | 11.27 | 18.12 | 31.75 | 6.15 | ||
| Scotia Pacific Rim | 28.6 | 2.80 | -17.01 | -12.70 | 7.28 | 9.48 | 5.04 | 11.11 | 26.37 | ||
| London Life Asian Growth (AGF) | 76.3 | 3.56 | -16.25 | -12.70 | 9.79 | 10.36 | 17.53 | 29.06 | 6.82 | ||
| FÉRIQUE Asian | 57.0 | 1.12 | -11.34 | -12.95 | 5.41 | 9.82 | -2.28 | 14.73 | 18.35 | ||
| GWL Asian Growth (A) NL | 8.5 | 3.74 | -16.72 | -13.52 | 9.26 | 10.06 | 17.21 | 29.43 | 5.84 | ||
| Quebec Professionals Asian Equity | n/a | 1.38 | -10.02 | -14.25 | 1.92 | 6.10 | -10.93 | 11.84 | 11.79 | ||
| TD Pacific Rim-I | 44.6 | 2.49 | -19.60 | -14.50 | 4.67 | 8.57 | 3.33 | 13.98 | 15.52 | ||
| Trans IMS Can-Asian | 34.1 | 4.00 | -14.62 | -14.70 | 8.82 | 12.07 | 9.08 | 20.44 | 18.44 | ||
| Investors Pan Asian Growth-C | 19.2 | 2.93 | -13.21 | -16.23 | 4.07 | 8.01 | -4.67 | 12.24 | 15.22 |
SOURCE: GLOBEFUND
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