Premium China (MAQ0441AU) Report & Performance

What is the Premium China fund?

Premium China Fund is a managed investment scheme which invests primarily in companies listed in Hong Kong, companies listed in Mainland China, companies listed in Taiwan and companies listed on other stock exchanges but with significant assets, investments, production activities, trading or other business interests in the Greater China region, or which derive a significant part of their revenue from the Greater China region.

  • May also invest in cash and short-term money market instruments.
  • Aims to provide long-term capital growth over a three to five year period, prior to exchange rates effects.
  • Yearly income distribution.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Premium China

Premium China Fund Commentary September 30, 2023

• Tencent, a world leader in the internet-related services space, provides services across instant messaging, social media, email, web-portals, e-commerce, advertising, online payment as well as multiplayer games.

• With offerings including QQ Instant Messenger and WeChat, Tencent is providing similar services to the likes of Facebook, Twitter and WhatsApp. By the end of Q2 2018, QQ had 803 million monthly active user accounts, whilst WeChat, since its launch in 2011, accommodates for over 1 Billion monthly active users.

• In November 2017, Tencent’s market value reached US$528 billion, surpassing Facebook’s market value at the time, which resulted in it being recognised as one of the world’s top 5 most valuable public companies.

Alibaba, an e-commerce giant, provides services ranging from web portals connecting businesses and consumers, electronic payment services and internet infrastructure.

• Its flagship site Alibaba.com is the world’s largest online business-to-business trading platform for small businesses, handling sales between importers and exporters from over 240 countries. whilst its consumer-to-consumer portal—Taobao functions similar to eBay featuring nearly a billion products. Currently, it is amongst one of the 20 most visited websites globally on a consistent basis.

• Global brands such as Nike, Uniqlo and Burberry, use Alibaba’s Tmall platform to market to an estimated 300 million shoppers. The companies online payment platform—Alipay is larger than PayPal and accounts for roughly half of all online payment transactions within China.

• Founded in 1999, CNOOC engages in the exploration, production and selling of crude oil, natural gas as well as other petroleum products. The company’s exploration sites, from which it extracts its crude oil and natural gas, are on offshore rigs in Bohai, Western South China Sea, Eastern South China Sea, and the East China Sea.

• On the 23rd of August 2018, the company announced its profits had increased by 57% year on year, whist also announcing an interim dividend of HK $0.30 per share, on the back of inflationary pressures from the international market. CNOOC, however, has been able to maintain its all-in production expenses at $31.83 per barrel. This has allowed it to remain competitive within the global market.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Premium ChinaMAQ0441AUManaged FundsForeign EquityAsia Pacific w/o JapanForeign Equity - Asia ex Jap IndexWorld Emerging Markets Index149.92 M2%0.00%0.5%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Premium China-4.53%-11.12%15.05%-12.33%6.31%29.08%24.94%19.53%-17.04%-50.51%-50.51%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Premium ChinaForeign Equity - Asia ex Jap Index5.24%-1.13%-0.09%-0.2%-0.2%1.915.89%9.05%0.970.91

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Premium ChinaYes-https://www.premiumchinafunds.com.au/-

Product Due Diligence

What is Premium China

Premium China is an Managed Funds investment product that is benchmarked against World Emerging Markets Index and sits inside the Foreign Equity - Asia ex Jap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Premium China has Assets Under Management of 149.92 M with a management fee of 2%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Premium China has returned -4.53% in the last month. The previous three years have returned -12.33% annualised and 19.53% each year since inception, which is when the Premium China first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Premium China first started, the Sharpe ratio is 0.26 with an annualised volatility of 19.53%. The maximum drawdown of the investment product in the last 12 months is -17.04% and -50.51% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Premium China has a 12-month excess return when compared to the Foreign Equity - Asia ex Jap Index of 5.24% and -1.13% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Premium China has produced Alpha over the Foreign Equity - Asia ex Jap Index of -0.09% in the last 12 months and -0.2% since inception.

What are similar investment products?

For a full list of investment products in the Foreign Equity - Asia ex Jap Index category, you can click here for the Peer Investment Report.

What level of diversification will Premium China provide?

Premium China has a correlation coefficient of 0.91 and a beta of 1.9 when compared to the Foreign Equity - Asia ex Jap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on Premium China and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Premium China with the World Emerging Markets Index?

For a full quantitative report on Premium China compared to the World Emerging Markets Index, you can click here.

Can I sort and compare the Premium China to do my own analysis?

To sort and compare the Premium China financial metrics, please refer to the table above.

Has the Premium China been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in Premium China?

If you or your self managed super fund would like to invest in the Premium China please contact via phone or via email .

How do I get in contact with the Premium China?

If you would like to get in contact with the Premium China manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Premium China. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - August 31, 2023

In August, the Fund was down 5.4% (in AUD), while the MSCI China Index recorded losses of 5.3% (in AUD).1 Year-to-date, the Fund and the Index were down 3.5% and 0.2%,1 respectively.

During the month, currency hedging was among the main detractors to the Fund’s performance, also leading to the portfolio’s slight relative underperformance to the index. Meanwhile, our holdings of industrial and insurance companies also dragged, partly due to the subsided expectations on “SOE reforms”. Other detractors included consumer-related names, which were impacted by the general weakness in the market. That said, our holdings are of high quality, and their business fundamentals are expected to remain resilient amid potential market volatility, especially given the slew of supportive measures the government released at the end of the month.

On the other hand, our holding of a leading e-commerce player was the top contributor to the Fund’s performance on the back of its stellar second-quarter results. Meanwhile, our stock picks in the energy and materials sectors also supported the Fund’s performance. These include one of the largest oil companies in China, which benefits from the higher oil prices and is supported further by its efficient operating cost control measures, and a fertilizer producer, which benefits from the steady demand outlook of its products. Other contributors include a telecom operator and a traditional Chinese medicine (TCM) provider.

Performance Commentary - July 31, 2023

In July, the Fund was up 8.6% (in AUD), while the MSCI China Index recorded gains of 9.4% (in AUD). Year-to-date, the Fund and the index were up 2.0% and 5.4%, respectively. The Fund’s gains were broad-based across sectors. Our stock picks in leading internet players within the consumer discretionary and communication services sectors were among the top contributors to the Fund’s performance, as they were boosted by the central government’s supportive policy stance toward private enterprises and platform companies. Our exposure to the financial sector also supported the Fund’s performance, as investors added to the more traditional areas of the market to position for the potential stimulus. In particular, our holding of an insurance company continued to benefit from its new business value growth. Currency hedging was also a contributor. On the other hand, our exposure to the healthcare sector slightly dragged the Fund’s performance, particularly our holdings of a leading traditional Chinese medicine (TCM) provider and a medical equipment manufacturer, due to profit-taking activities from investors following the sector’s positive performance in recent months.

We remain constructive about our holdings as they should ride on the normalizing demand for consumer and medical products and services. In addition, we did not own some of the benchmark companies that also performed strongly alongside the market during the period, including internet- and electric vehicle-related names, leading to a drag on the Fund’s relative performance. That said, we remain selective in these areas and have more conviction in our current holdings, as we view them to have better long-term earnings visibility and risk-reward profiles.

Performance Commentary - June 30, 2023

In June, the Fund was up 1.3% (in AUD), while the MSCI China Index recorded gains of 1.1% (in AUD). Year-to-date, the Fund and the index were down -6.1% and -3.7%, respectively.

The top contributors to the Fund’s performance include select internet names in the consumer discretionary and communication services sectors, as they are expected to maintain revenue growth ahead despite the short-term bumpiness of the economy. Meanwhile, a high-quality property developer yielded positively despite the ailing property market, as it delivered stronger sales growth relative to its peers and has continued to progress with the construction and delivery of its projects. A leading regional insurance company also supported the Fund, given it steady business growth outlook, especially with strong business demand associated with the resumption of mainland Chinese visitors to Hong Kong.

On the other hand, our exposure to SOEs, including those in the industrials and telecommunications sector, was a key detractor to the Fund’s performance, as expectations of SOE reforms moderated during the month. Our exposure to the healthcare sector, particularly our holdings of a medical equipment manufacturer and a traditional Chinese medicine (TCM) provider, also dragged as investors took profit following the sector’s positive performance in recent months.

Although the Greater China market opened higher at the beginning of June on expectations of more policy stimulus, the optimism gradually faded as macroeconomic indicators continued to disappoint, giving up some of the earlier gains in the month.

The latest consumer price (CPI) data continued to indicate a threat of deflation, remaining at an anemic level of 0.2% YoY in May, while the decline of the producer price index (PPI) also enlarged from the previous month.1 Exports also declined in May, reversing a surprisingly positive growth in the previous two months. Within the property sector, new home sales also weakened in June. Adding to the market’s worries include the youth unemployment rate (aged 16-24) rising to a record high and the weakening renminbi relative to the US dollar.

On a positive note, the government gave signals that economic growth remains a key priority, with various easing measures to support the country’s recovery. In June, the oneand five-year loan prime rates (LPRs), which are the reference rates for corporate loans and mortgages, respectively, were cut by 10bps. That said, expectations for more sizable stimulus packages, particularly targeting the property market, have not been met.

On the geopolitical front, communications between senior officials of China and the US, including the US State Secretary Blinken’s visit to Beijing, indicate intentions of smoothening tensions. Meanwhile, Premier Li Qiang, who gave a keynote speech at the World Economic Forum, rejected the West’s increasing rhetoric of “de-risking” from China and instead called for greater global cooperation. However, although these may help prevent tensions from further escalating, we have yet to see concrete steps to ease tensions.

Performance Commentary - March 31, 2023

In March, the Fund was up 2.9% (in AUD), while the MSCI China Index was up 5.2% (in AUD).3 For the first quarter, the Fund was up 3.8% (in AUD), while the index performed 6.0% (in AUD).3

During the month, the key detractors were financial names, dragged by the weakened sentiment caused by the SVB and Credit Suisse incidents. However, we believe the impact of the recent events on the banking sector in China (as well as Asia as a whole) is rather limited. Other detractors included a major e-commerce player, which delivered a lower-than-expected set of quarterly results, and a leading solar component maker. Currency hedging was also a detractor to the Fund’s performance. On the other hand, some of our portfolio holdings continued to yield positively.

These include some internet companies, which continued to benefit from the economic recovery and the regulatory tailwinds. Our positions in some SOE companies were also boosted by expectations of further SOE reforms as well as the rapid development of industrial digitalization, especially on cloud infrastructure services.

Performance Commentary - February 28, 2023

In February, the Fund and the MSCI China Index performed -7.7% (in AUD) and -6.3% (in AUD)1 , respectively. Currency hedging was a detractor to the Fund’s performance.

The key draggers in this month are mainly leading internet companies and financial names – many of which were outperformers in the previous three months and had a strong run. We believe their corrections were primarily sentiment-driven, as there are no signs of any significant deterioration to their fundamental outlooks.

On the other hand, some of our portfolio holdings were resilient despite the broader market correction and supported our Fund. In particular, these include our exposure to Chinese telecom operators, which were boosted by expectations of further SOE reforms to bolster their shareholders’ returns and faster adoption of cloud infrastructure services. Currency hedging was also a detractor to the Fund’s performance.

We believe the market correction, which occurred after a strong and lengthy market rebound, is only temporary, and the market still hasn’t fully priced in the solid macroeconomic recovery and the corporate earnings rebound of China. The market could remain volatile in the near term as investors focus on the messages around the “Two Sessions” in China. On 5 March 2023, China disclosed the GDP growth target of “around 5%” for 2023, which is at the conservative end of the consensus forecast range of 5-6%. While this may upset some investors, we continue to hold an optimistic view of China’s stock market outlook.

Performance Commentary - December 31, 2022

In December, the Fund and the MSCI China Index were up 3.8% (in AUD) and 3.9% (in AUD)1 , respectively.

Returns were broad-based and widespread among different individual names, particularly led by companies in the consumption, financial, and internet sectors, as they were supported by expectations of reopening between Hong Kong and mainland China. The top contributors include a leading internet player, which benefited from the release of online video gaming licenses, a regional insurance company, and a leading retail bank in China.

However, their positive contributions were partly offset by the share price corrections in some other names. For example, a leading semiconductor foundry was hit by concerns of a harsher global consumer electronic downturn.

Despite some near-term pressures, we continue to believe the company offers compelling long-term value, given its unique strategic positioning and unrivalled leading position in advanced node manufacturing, which could help to preserve its business competitiveness and profitability over the long term.

We are confident that 2023 will be a year of recovery for China, and there is still large potential upside on the back of the low valuations and prospective corporate earnings upgrades. That said, we expect the road ahead to remain bumpy, especially on swift movements in some macro data points and economic events. In particular, the accelerated reopening and exit of anti-Covid controls have adversely affected near-term mobility and business activities in China and may lead to softer near-term macro readings. However, these are also expected to be followed by a robust rebound later. Overall, we remain nimble and diligent in our portfolio management, with a view to safeguarding the portfolio’s robustness. We continue to invest in high-quality companies – particularly in the consumption, financial, and technology sectors, that will ride through the volatility and thrive over time.

Performance Commentary - November 30, 2022

In November, the fund and the MSCI China Index were up 22.3% (in AUD) and 23.9% (in AUD),4 respectively.

The significant market rebound during the month was rather broad-based. All major sectors have registered positive returns, mainly led by the real estate and internet companies, as well as some consumption names that are perceived to benefit from China’s phasing out of its anti-Covid policies (i.e., reopening). These primarily reflected the renewed investor enthusiasm amid the strong funding support for property developers and the fine-tuning of anti-Covid policies in China.

For the fund’s performance, the biggest contributors include leading e-commerce players, consumer names, and financial companies. Despite macro headwinds, these companies have all reported solid results for the third quarter of this year, which showcase that our portfolio’s high-quality holdings are well-positioned toward the market turnaround.

Although market sentiment has remained buoyant in recent weeks, we anticipate share prices to remain choppy as different macro data and business activities reports are released. For one thing, property sales in China will likely remain weak in the near term, and without a meaningful pickup, it is hard to see how long the strong rally in distressed property companies could sustain. The same thought applies to some “reopening plays”, as we still foresee some back-and-forth in the loosening of anti-Covid measures, which were held for a long period, and it would take time for people to accommodate the new normal.

Looking ahead, one key event to watch is the central economic working conference that will be held in the coming few weeks, which could outline more top policy directions in China. Regarding our portfolio holdings, we continue to invest in high-quality companies that will ride through the volatility and thrive over time. We remain optimistic about China’s long-term market outlook and have strong faith that our long-held practices in diligent, thorough, deep-dive, and bottom-up research will bear fruits over the long term.

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