China funds escape unscathed from trade war volatility
China funds have seen positive returns this year despite volatility caused by the US/China trade war with one fund in particular achieving returns of almost 30 per cent.
The US/China trade war was described by industry experts as the biggest threat to global markets and had been an ongoing theme for several months as US President Donald Trump and Chinese Premier Xi Jinping attempted to reach a deal.
According to FE Analytics, there were four Australian funds which invested solely in China. These were Fidelity China, Premium China, VanEck Vectors China New Economy ETF and Vasco ChinaAMC China Opportunities.
In the year to the end of June, the best-performing fund was the $39 million VanEck Vectors China New Economy ETF which returned 29.3 per cent. The fund, which was launched last year, sought to invest in mainland Chinese companies from consumer discretionary, consumer staples, healthcare and technology sectors.
At the other end of the spectrum, the Vasco ChinaAMC China Opportunities fund returned 3.5 per cent over the same period.
Sat in the middle, the Premium China fund returned 12.9 per cent and the Fidelity China fund returned 8.9 per cent.
MSCI China, the most-commonly used benchmark for Chinese funds, returned 12.3 per cent while the wider ACS Asia Pacific ex Japan sector returned 5.8 per cent.
Randal Jenneke, manager of the T. Rowe Price Australian Equity Strategy, said: “The breakdown in US/China trade talks remains the biggest threat to global markets. We expect concerns over trade and a global economic slowdown to continue to dominate markets in the short term.
“The risk is that the longer the impasse continues, the more collateral damage there is likely to be for the global economy.”
AUTHOR
Laura Dew
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