Should you exit from Edelweiss Greater China Equity Off-shore Fund?
It all started last year in the month of October when Alibaba Co-Founder Jack Ma, one of the best-known faces of China’s growing cult in technology, darned Chinese regulators for stifling innovation. The immediate response to this was the Chinese Government squashing Ma’s plan of taking Alibaba’s fintech offshoot, Ant Group Co., public. It also initiated an antitrust case against Alibaba. The latest crackdown by the Chinese government is a continuation of the ongoing regulatory purge of the technology sector in China, unleashed by Xi Jinping. It is causing not only Chinese companies but also, investors worldwide to bleed.
Indian investors are also impacted by such rout in the technology shares in China. Edelweiss’ Greater China Equity Off-shore Fund, the only China-dedicated fund in India, has seen a fall in its net asset value over the past few days due to the losses suffered by China’s technology companies.
In the last fortnight, the NAV of the fund was down by eight per cent. It is down from Rs 61 on July 15 to Rs 55.966 as of July 26, 2021. This Edelweiss fund feeds into JP Morgan Greater China Fund. It is benchmarked to MSCI Golden Dragon Index. The fund invests in China, Hong Kong, and Taiwan, although the bulk of its investments are in the People’s Republic of China.
The fund has not been performing well in the last six months. Since February 2021, the NAV of the fund has lost 20 per cent of its value compared to other international funds, giving handsome returns.
Return of Fund For Different Periods Ending July 26, 2021
|
Period
|
Returns
|
|
MTD
|
-9.15%
|
|
3 Months
|
-7.42%
|
|
6 Months
|
-13.37%
|
|
YTD
|
1.25%
|
|
1Y
|
28.89%
|
|
3Y(ann.)
|
23.55%
|
|
5Y(ann.)
|
23.42%
|
There are 76,000 investors in the fund and has Rs 1,838 crore of AUM at the end of June 2021. We believe the best of this fund is over as it has generated twice the rate of S&P BSE 500 index over the past 10 years, ending the second quarter of FY21. The recent change is not transitory in nature and may drag the performance of the fund for a while and better to see other international funds.
Top Three Holding of JPMorgan Funds - Greater China Fund A
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Top 3 Holdings
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Sector
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% AUM
|
|
Taiwan Semiconductor Manufacturing
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Technology Technology
|
9.55
|
|
Tencent Holdings Ltd
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Communication Services Communication Services
|
9.31
|
|
Alibaba Group Holding Ltd
|
Consumer Cyclical Consumer Cyclical
|
8.4
|