Chinese funds: 10 investment options to consider

Introducing Chinese Funds for Thai Investors requires careful analysis. As the world’s second-largest economy, China still has long-term growth potential. Although Chinese stock markets have experienced downturns recently, long-term vision investors continue to seek opportunities in this market.

Chinese Funds: Types and Investment Strategies

Before recommending Chinese funds to investors, we should understand that Chinese funds can be divided into two main categories, which differ significantly in characteristics and management approaches.

Index Funds (Passive Funds) are designed to deliver returns close to a specified Chinese stock index. These funds have low fees and are suitable for beginners investing abroad, as they carry moderate risk tolerance.

Stock-Picking Funds (Active Funds) involve proactive management, where fund managers aim to outperform benchmark indicators. These funds offer a variety of options and are suitable for investors willing to accept higher risk.

Top 10 Chinese Funds: Returns and Key Features

The table below shows the benefits received over different periods for recommended Chinese funds to consider:

(Source: morningstarthailand.com at end of review period)

Performance Comparison: High-Return Short-Term Chinese Funds

From the above data, we can categorize recommended Chinese funds based on their operational characteristics:

Group 1: Balanced Returns – SCBCEE, SCBCEP, SCBCE

SCBCEE is the flagship fund, with a year-to-date return of 11.37%, and a 3-year average of 6.88% per year. It’s suitable for long-term investors confident in China’s market recovery. However, the 5-year return of only 0.56% indicates recent challenges.

SCBCEP offers a 10.38% return in the latest year, focusing on long-term growth, ideal for retirement planning, with 3-year returns at 5.94% and 5-year at -0.33%.

SCBCE has similar management to SCBCEE, with a return of 10.91% and 3-year average of 5.81% per year. These three funds do not pay dividends but aim to increase investment value.

Group 2: Strong Short-Term Performance – SCBCEHE, TISCOCH, KF-HSHARE-INDX, SCBCEH

These funds show impressive short-term gains, with SCBCEHE leading at 14.63%. However, their 3-year returns (around 4.30%) and 5-year returns (negative, between -2.09% and -3.26%) suggest that short-term price surges may not be stable enough for long-term decisions.

TISCOCH, KF-HSHARE-INDX, and SCBCEH also have short-term returns around 14-14.21%, but long-term returns are negative. These are suitable for investors strongly believing in a market rebound and willing to accept medium- to long-term volatility.

Group 3: Country-Specific Structures – SCBCE(SSF) and TCHRMF

SCBCE(SSF) is a special option for tax benefits via the Super Savings Fund, with a cumulative return of 10.92%. Suitable for disciplined savers aiming for long-term investment, though 5-year data is unavailable.

TCHRMF is a retirement-focused (RMF) fund, with a return of 13.89%, 3-year return of 3.57%, and 5-year return of -3.16%, reflecting market challenges.

Understanding Risks: Perspectives of Retail Investors

When considering recommended Chinese funds, investors must recognize that Chinese stock markets have unique characteristics. Short-term returns can be high, but long-term returns are often negative, signaling medium-term market volatility.

For conservative investors, funds like SCBCEE, SCBCEP, or SCBCE with 3-year returns between 5.81-6.88% are preferable, despite negative 5-year returns.

For risk-tolerant investors, options like SCBCEHE, TISCOCH, or TCHRMF may offer more attractive short-term gains but require full understanding of long-term risks.

Summary: Strategies for Choosing Chinese Funds

The recommended Chinese funds should align with individual investment goals, time horizons, and risk appetite. Most of these funds employ a balanced strategy between passive and active management to mitigate risks.

If you are considering investing in Chinese funds, carefully review the prospectus of each fund. International investments carry high risks and may not suit everyone. Exercise caution and consider your investment objectives before making decisions.