Chinese Funds
Funds run by Morgan Stanley, UBS and BelgraveCapital Management have topped a table of 2017`sbest-performing investments after returning at least70 per cent on the back of rising markets in Asia.
The best-performing fund globally was the $122mVitruvius Greater China Equity, run by boutiqueasset manager Belgrave, which returned 81 per centin 2017. Morgan Stanley`s Asia Opportunity and twoChina-focused funds from UBS also ranked in thetop four.
In total, 14 of the 20 funds that generated topreturns in 2017 specialised in investing in China, according to figures compiled for FTfm byMorningstar, the data provider. The data includes open-ended funds based in Europe, the US,Canada and offshore jurisdictions with at least $100m in assets.
Wing Chan, director of manager research in Asia for Morningstar, said Chinese stocksperformed well thanks to [the market`s realisation that Chinese economic growth has stabilised"and strong growth in the tech and consumer sectors.
The MSCI China index of stocks increased almost 55 per cent last year, with strongperformances from Tencent and Alibaba, the tech businesses. Last year, MSCI announcedplans to include Chinese mainland equities, known as A-shares, in its index from 2018, helpingboost prices.
[[With a rising stock market] it is not a surprise to see that Chinese equity funds haveperformed well," Mr Chan said.
Mattia Nocera, managing director of Belgrave, said the Vitruvius fund had [benefitedparticularly in 2017 from the substantial shift toward consumption taking place in China",which helped global brands operating in the country, as well as driving growth in its serviceand ecommerce sectors. [These areas will continue to offer outstanding returns in the years tocome with a lot more consumers rising to spending levels we see in the US and Europe," headded.
Sprott Energy Series topped the worst-performing funds list, losing almost 35 per cent in theyear.
Portfolio manager Eric Nuttall said the disappointing performance was down to the fund`spositioning.
He said it was [aggressively positioned" for the OECD to draw down on its oil surplus, with theview that this would reveal an undersupply in the market and lead to a rally in the price ofcrude oil.
[While being correct on the macro, energy stocks did not respond and many, especially in themid-cap area which we specialise in, greatly lagged the oil price move," he said.
Two funds offered by Crispin Odey, the hedge fund manager, also appeared in a list of theworst performers. Mr Odey`s funds have suffered large redemptions in recent years. Thecompany did not respond to a request for comment.
The worst-performing funds also included products from Amundi, Europe`s largest assetmanager, and Pimco, the bond fund manager, while Investec, Neuberger Berman and Invescoappeared on the best-performing list.
Kristian Heugh, portfolio manager of the Morgan Stanley Asia Opportunity fund, put thefund`s success in 2017 down to focus on [own[ing] big ideas that win over time".
Bin Shi, head of China Equities at UBS Asset Management, said its funds had done wellbecause it was [concentrated in high-quality, reasonably priced blue-chips".
[The A share market has a huge shift of investment style, away from extremely overpricedsmall and mid-caps," said Mr Shi.
[We think this trend will continue in 2018 as blue-chips are still trading at a significantdiscount to the overall market, even after re-rating in 2017."
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2018 01/23