China factor bears fruit
China-focused funds led the performance rankings last month for all funds authorised for distribution to Hong Kong retail investors, data from funds' monitor Lipper shows.
The Hong Kong market's standout performance in October, ensured that funds with a focus on domestic and China-related stocks took top honours for the month. The Hang Seng Index was up 15.5 per cent for the month, but the market's red-chip sub-index was up 20 per cent and the China Enterprises Index was up 18 per cent.
The data shows that exposure to China provided through Hong Kong-listed stocks allowed funds to benefit from the upside presented by China's economic outlook, without suffering the volatility of its overbought and overvalued locally listed stocks.
Top-performing funds for the month among the 1,665 funds authorised for sale to retail investors in Hong Kong, were the Lyxor Alpha Equity Fund, which tracks the Hang Seng Index, and was up 29.2 per cent; followed by the Celsius China Accelerated Growth Fund (27.25 per cent), and the Hang Seng China H-Share Index Leveraged Fund (25.1 per cent).
More than half of the 1,665 funds authorised for sale to retail investors in Hong Kong are equity funds (933 in total), and on average they were up 5.64 per cent at the end of October, said Lipper, with the bottom three performers being EK Hong Kong & China (-6.3 per cent), JF Japan Technology Fund (-4.5 per cent), and Celsius Financial Select Income USDA (-4.1 per cent).
Among bond funds (up 1.65 per cent for the month on average), those invested in sterling and euro-denominated credits outperformed all others. The three bond funds delivering the highest returns in October 2007 were Parvest Asian Convertible Bond C (+7.85 per cent), ABN Amro Global Emerging Markets Bond (EUR) A (+6.1 per cent), and ABN Amro Global Emerging Markets Bond (USD) A (+4.7 per cent).
Mixed asset funds (which hold both equities and bonds in varying proportions), returned 3.4 per cent on average over the month. 'Aggressive' funds with a higher exposure to Asian equities took the top-three rankings in the sector, the best performer being JF AsiaOne (+11.4 per cent), AIG Global Funds-AIG Asia Balanced (+9.6 per cent), and Baring Asia Balanced (+8.35 per cent).
