Confidence returns to China as funds see inflows

There has been renewed interest among China funds with funds seeing increased flows after a drop-off during March’s market crash.

According to data from FE Analytics, within the Australian Core Strategies universe, there were five dedicated China funds in the Asia Pacific single country sector.

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These were Fidelity China, Premium China, VanEck Vectors China New Economy ETF, VanEck Vectors ChinaAMC CSI 300 ETF and Vasco ChinaAMC China Opportunities, the largest of which was Premium China at $137 million.

At the end of 2019, the largest fund was Premium China at $175 million while Fidelity had $102 million and the VanEck funds had $56 million and $30 million respectively (Vasco ChinaAMC did not supply its historical assets data).

However, by the end of March, three of the four funds had seen double-digit outflows as concerns heated up over the COVID-19 pandemic, US/China trade tensions and the market downturn.

The VanEck Vectors China New Economy ETF was the only fund to see an increase in assets from $56 million to $66 million while the other three funds reported declines of between 11%-23%. It was also the only fund to report consistent growth in assets since the start of the year.

The China New Economy ETF specifically invested in companies in the consumer discretionary, healthcare and technology space while the ChinaAMC CSI 300 fund tracked a China benchmark index.

When it came to performance, the VanEck Vectors China New Economy fund was also the best performer since the start of the year to 31 August with returns of 44%.

Outflows then continued until June before seeing an uptick as the country began to recover from the pandemic with only Fidelity China continuing to report outflows. The Fidelity China fund was also the only one of the group to report negative performance since the start of the year with losses of 8%.

Premium China returned 12% while the VanEck Vectors ChinaAMC CSI 300 ETF returned 4.7% over the same period.

Fund size of China funds

Performance of four China funds since start of the year to 31 August 2020