Across The Border | State-backed institutions outshine stock-focused mutual peers
The state-backed institutions seek stable and long-term returns from equity investment, normally picking profitable stocks with solid fundamentals
Some of the mainland’s government-based equity market funds – often referred to as the “national team” – which includes state-backed institutions such as the national pension fund – has become the envy of many retail markets around the world after managing to stem the flow of investment losses last year, after the disastrous summer of 2015.
According to state-owned Securities Daily, Central Huijin Investment and China Securities Finance Corporation, for instance, raked in a combined paper profit of 528 million yuan (US$76.7 million) from investing in 45 A-share firms last year – an impressive performance in a bear run which eventually saw 12.3 per cent wiped off the value of the benchmark Shanghai Composite Index.
The country’s stock-focused mutual funds lost 11.2 per cent of their investment last year, according to Vstone, a Shanghai-based hedge fund house. Just 12 per cent of the nearly 500 mutual funds actively involved in share trading managed to post a profit, Vstone added.
“These stronger performances of the national team should inspire investors to follow on their heels,” said Ivan Shi, head of data analytics at Shanghai-based fund consultancy Z-Ben Advisors, and that’s buying stocks based on solid fundamentals.
“After all, they outperformed the benchmark indicator and the mutual funds.”
