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The best-performing Chinese mutual fund of 2023 is reaping further gains in a volatile corner of the market that gained enough upside to beat more than 7,000 competitors last year.
The fund’s mission requires it to invest at least 80% of its equity assets in stocks listed on the emerging Beijing Stock Exchange, even as Chinese stocks generally have fallen due to the economic slowdown and real estate crisis. Despite this, it achieved a 59% return in 2023.
“Investing on the Beijing Exchange is like sprinting on a high-speed train,” said Mr. S., fund manager at China Asset Management (Beijing), China AMC BJSE Innovative Small and Medium Enterprise Selection 2-year Regular Open Mixed Launch. said Gu Xinfeng, who oversees the fund. “Many investors are still confused about the rise in Beijing’s stock prices. The rally was fast and there were huge profits, but money is flowing in.”
The fund’s return in 2023 is expected to be about 60%, compared with a 15% rise in the Beijing Stock Exchange 50 index, which tracks stocks considered the most representative in the index, and an 11% decline in China’s benchmark CSI300 index. . Most of the 7,337 mainland Chinese mutual funds lost money last year, according to data compiled by Bloomberg.
The Beijing exchange’s strong performance was largely due to a policy package announced in September that allowed companies on the exchange to transfer their listings to other exchanges and promised to lower trading requirements for investors. Mr. Gu said. The Beijing Stock Exchange just launched in 2021 as a funding channel for early-stage companies with innovative potential.
Gu said Chinese stocks are likely to rebound this year as most indicators have fallen significantly, and the Beijing market is likely to widen its potential upside.
Continued pain: 90% of Chinese stock funds suffer as US$1 trillion in value disappears
Continued pain: 90% of Chinese stock funds suffer as US$1 trillion in value disappears
“While some Beijing stocks may be overbought, the overall bull market is not over yet and the Beijing Stock Exchange 50 Index will probably rise over the next six months,” he said. .
Mr. Gu’s fund, which had assets of 404 million yuan (US$56 million) at the end of September, has a somewhat unusual format, allowing for offers and redemptions for only a few days every two years.
The fund was last open to investors in early December, and investors pared back some of their holdings during that period, likely due to lengthy lock-up requirements, Gu said. The next subscription and redemption deadline is December 2025. The investment obligation also includes investing up to 20% in Hong Kong stocks and at least 5% in cash and government bonds during the open-end period.
Mr. Gu also manages an exchange-traded fund outside Beijing, but said he has been switching out some Shanghai and Shenzhen-listed companies from that fund and replacing them with Beijing-listed stocks.
As of the end of September, the fund’s top holdings include auto parts supplier Suzhou Junchuan Automotive Technology, bearing maker Suzhou Bearing, and Copper Chemical Industry, which makes materials used in recycling EV batteries. All three companies each rose at least 25% in the fourth quarter.
He said the success of the Beijing Stock Exchange has encouraged more asset managers to start researching and investing in startups.
“Many of the fund managers looking at Beijing’s stock exchange stumbled across the firm while searching for a leader in a niche sector, rather than trying to pursue boardroom opportunities.” he said.
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