As a leading emerging market economy, China has drawn steadily increasing interest from investors for decades, thanks to opportunities in the telecommunication, financial services, and consumer goods sectors. The following three Chinese mutual funds capitalize on the opportunities in these and other areas.
Matthews China Dividend Fund
Launched in 2009, the Matthews China Dividend Investor Fund (NASDAQ: MCDFX) is part of a trio of Chinese funds offered by Matthews International. Managed by Yu Zhang, the $349 million fund primarily focuses on capital appreciation and current income, targeting dividend-paying stocks of companies that are either based in China, or that conduct extensive business there. The fund relies on fundamental analysis and a value investing approach to stock selection and may also invest in convertible debt. The fund has an expense ratio of 1.15%, which is considered to be below average for actively-managed emerging market funds, and it boasts at five-year annualized return is 8.97%.
Major holdings include apparel manufacturer Shenzhou International Group Holdings, China Construction Bank H Shares, Boer Power Holdings, Yum Brands, and the Shanghai Baosight Software Company.
Fidelity China Region Fund
Launched in 1995, the Fidelity China Region Fund (NASDAQ: FHKCX) uses fundamental analysis of companies, industries, and economic conditions to find stocks with potential
for long-term capital appreciation. Managed by Bobby Bao, the fund ordinarily invests at least 80% of its $1.3 billion portfolio in companies located across China, including Taiwan and Hong Kong. Any dividends or capital gains are distributed annually. The fund carries a 0.95% expense ratio and boasts a five-year annualized return of 7.46%
Holdings include the China Construction Bank and the Bank of China Beijing, the Taiwan Semiconductor Manufacturing Company, Hong Kong Exchanges and Clearing, Ping An Insurance Group, and media company Tencent Holdings.
Oberweis China Opportunities Fund
The Oberweis China Opportunities Fund (NASDAQ OBCHX), from purveyor Oberweis Funds, is managed by firm president James Oberweis and was launched in 2005. The fund strives to
achieve capital growth by investing at least 80% of its assets in Chinese common stocks that it deems likely to achieve this goal. The fund may additionally invest in securities that provide exposure to foreign markets. With a 1.91% expense ratio, the fund boasts a five-year annualized return of 3.49%. Interestingly, its more recent three-year annualized return is 11.36%.
Major holdings include the online discount retailer Vipshop Holdings, whose share price has more than doubled since 2012. The fund also holds positions in Tencent Holdings, Ping An Insurance Group, energy firm China Everbright International, biopharmaceutical firm China Biologic Products, and Chinese internet technology firm NetEase.