Axis Greater China Equity Fund, which was launched in February this year, saw its AUM rise 4 times to Rs 120 crore in August from nearly Rs 30 crore at the end of February, while the NAV fell 14% in the same time frame. Edelweiss Greater China Equity Off-Shore Fund has increased its AUM by 62% to Rs 1,808 crore in August from around Rs 1,119 crore at the end of 2020 even as the net asset value (NAV) in the same period ) fell more than 6%. Both have a fund of funds (FOF) structure, where capital is invested in the underlying schemes, which in turn buy stock in China, Hong Kong and Taiwan (the Greater China region).
“We are getting constant inflows… smart investors are adding more, a lot of people were waiting on the fence to invest in China. July was one of the best months for big fund inflows from China. Even August and this month have seen good inflows.” Niranjan Avasthi, leading products, marketing and digital at Edelweiss MF.
Axis MF is also witnessing steady increase in investor interest and its fund has registered net inflows since inception. “The biggest category in the fund is mature investors who understand the role of allocation to China in their portfolios. Informed investors are also aware that although the Chinese market has delivered good returns, it has historically been highly volatile,” said Ashwin Patni, head of products and options at Axis MF.
The Edelweiss Fund has around 20% exposure to the technology sector, which is bearing the brunt of regulatory action. “China wants to cut monopolies, make clear paths with some social aspects. Story of China from export-driven economy to domestic-driven… Mainland China market is also being linked to emerging market indices, which will lead to further increase in global inflows,” said Awasthi, easing the pain in the tech sector . out in a year.
“China has a very high growth environment. But it is also a market that has a very heavy trader component, so we see huge volatility from time to time. Therefore, investors coming in without this context should be avoided. At present, global funds are a small niche, China is even smaller. However, investment in international markets will gradually increase and may reach 10% of equity allocation in a few years, Patni said. According to.
A Goldman Sachs report released last week quoted economists as saying China is still investable because the rules are unlikely to structurally affect earnings of companies.
Edelweiss Fund, launched in 2009, has posted a return of 20% (Compound Annual Growth Rate, or CAGR) over the last 5 years, which has helped in attracting investors looking for better returns over the last one and a half years. The AUM of Edelweiss Fund has increased from around Rs 152 crore at the start of the pandemic to over Rs 1,800 crore this month.
Sachin Bansal backed Navik on Friday mutual fund also filed for China-focused FoF with markets regulator SEBI, which would make it the third such mutual fund scheme in India.
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