Funds run by Morgan Stanley, UBS and Belgrave Capital Management have topped a table of 2017’s best-performing investments after returning at least 70 per cent on the back of rising markets in Asia.
The best-performing fund globally was the $122m Vitruvius Greater China Equity, run by boutique asset manager Belgrave, which returned 81 per cent in 2017. Morgan Stanley’s Asia Opportunity and two China-focused funds from UBS also ranked in the top four.
In total, 14 of the 20 funds that generated top returns in 2017 specialised in investing in China, according to figures compiled for FTfm by Morningstar, 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 stocks performed 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 strong performances from Tencent and Alibaba, the tech businesses. Last year, MSCI announced plans to include Chinese mainland equities, known as A-shares, in its index from 2018, helping boost prices.
“[With a rising stock market] it is not a surprise to see that Chinese equity funds have performed well,” Mr Chan said.
Mattia Nocera, managing director of Belgrave, said the Vitruvius fund had “benefited particularly 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 service and ecommerce sectors. “These areas will continue to offer outstanding returns in the years to come with a lot more consumers rising to spending levels we see in the US and Europe,” he added.
Sprott Energy Series topped the worst-performing funds list, losing almost 35 per cent in the year.
Portfolio manager Eric Nuttall said the disappointing performance was down to the fund’s positioning.
He said it was “aggressively positioned” for the OECD to draw down on its oil surplus, with the view that this would reveal an undersupply in the market and lead to a rally in the price of crude oil.
“While being correct on the macro, energy stocks did not respond and many, especially in the mid-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 the worst performers. Mr Odey’s funds have suffered large redemptions in recent years. The company did not respond to a request for comment.
The worst-performing funds also included products from Amundi, Europe’s largest asset manager, and Pimco, the bond fund manager, while Investec, Neuberger Berman and Invesco appeared on the best-performing list.
Kristian Heugh, portfolio manager of the Morgan Stanley Asia Opportunity fund, put the fund’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 well because it was “concentrated in high-quality, reasonably priced blue-chips”.
“The A share market has a huge shift of investment style, away from extremely overpriced small and mid-caps,” said Mr Shi.
“We think this trend will continue in 2018 as blue-chips are still trading at a significant discount to the overall market, even after re-rating in 2017.”
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