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China funds top performance in February with average 9% returns

Seven of top-10 returning funds belong to China

Shanghai night scene of Pudong area and Huangpu river


IA China funds topped the charts in the month of February with returns of 9% for the sector, almost double any of its peers, according to data from FE Fundinfo.

The sector was pushed to the top by leading performances from Matthews China Small Companies, returning 14.4%, Redwheel China Equity, at 13%, SVS Aubrey China, at 12.99%.

Other funds among the top 10 for performance in February included Vontobel China A Shares Leaders, T Rowe Price China Evolution Equity, NB China Equity and Barings China A Share all returning above 11.4%.

Ben Yearsley, director of Fairview Investing, said: “There was only one game in town in February, China funds. Seven of the top 10 were China invested and most of the top 20 were likewise.

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“Matthews China Small Companies topped the pops with a gain of 14.41% last month. The only other fund of note worth mentioning in the top 10 was the Nikko ARK Disruptive Innovation fund gaining over 12% on the back of a strong showing from Nasdaq and stellar returns from Nvidia.

The dominant performance from China was preceded by technology and technology innovation at 5%, global emerging markets at 4.8%, and North America and healthcare tying at 4.7%. Struggling sectors included Property Other, dropping 1.87% on average, followed by UK Smaller Companies, UK Gilts, Eur Government Bond, and UK Index Linked Gilts, which all had negative returns over 1%.

“Looking at property and the big story in February was undoubtedly L&G turning their physical property fund into a hybrid of property shares and physical. The writing for physical property funds has been on the wall for many years and with the FCA too timid to make any kind of judgement on the sector it’s been left to fund managers to kill the sector,” Yearsley said.

“It was a toss-up between property and gold which had the most funds near the bottom. While gold is near an all-time high, gold funds have been languishing for a while now and other metals, such as lithium have really been in the doldrums.”

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Individually, the Aviva European Property fund dropped furthest, falling 12%. Baker Steel Gold & Precious Metals followed closely, dropping 11.38%, with Charteris Gold & Precious Metals rounding out the group with negative returns over 10%, with -10.5%.

Across investment trusts, highest-performer SDCL Energy Efficiency Income Trust returned 19.4%, however, its share price sits at 65p, down from the 12-month peak of 94.9p.

The Alpha Real Trust brought in a 17.6% return with a share price of 140.5p at close on 29 February according to the AIC, while the third-ranked Weiss Korea Opportunity trust returned 13.9% with a share price of 176.5p.

“There has been more drama especially with the newer, more specialist trusts,” Yearsley noted, referencing Digital 9’s decision to wind down and ongoing issues at Hipgnosis Songs.

“In performance terms it was the four trust Country Specialist sector that topped the tables gaining 8.2%. This sector has three Vietnam trusts and a Korea one – Korea has been vying with China for the title of the cheapest market for a while now. It was an Asia dominated top five with China, Japan and Asia Pacific Income also featuring.”

This article was written for our sister title Portfolio Adviser

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