Should you invest in China-focused funds right now?

Should you invest in China-focused funds right now?

Published: 15th July 2024

By: Value Research

Top headline numbers

China’s economy seems to be on an upward trajectory. With GDP growth exceeding expectations in the first quarter of 2024, a rebound in company earnings and a surging manufacturing sector, the economy looks to be in good shape.

However…

A closer look at the financials paints a completely different picture.

Why?

1) Prevailing slowdown in real estate, 2) Sluggish post-Covid growth 3) Low consumer confidence 4) Souring foreign relations 5) Foreign capital outflows

Do Indian mutual funds invest in China?

Right now, around 15 Indian funds are invested in Chinese equities, with a collective AUM of Rs 3,400 crore. Of this, Edelweiss Greater China Equity Off-shore Fund and Nippon India ETF Hang Seng BeEs manage more than 50% of the total assets.

Has the slump impacted the performance of these funds?

Both Edelweiss Greater China Equity Off-shore Fund and Nippon India ETF Hang Seng BeEs have underperformed the Indian market (BSE 500 TRI) by wide margins.

While BSE 500 TRI’s five-year CAGR was 21% (as of July 11, 2024), Edelweiss grew at a mere 7% while Nippon’s growth was in the red (-2.7%) during the same period.

So, where should you invest for international diversification?

To find out, read the full story by clicking the link below.

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