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Portfolio Composition of China-focused Mutual Funds: ALQAX and RSCHX

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Introduction

In this part of our series on the performance of select China-focused mutual funds in 3Q15, we’ll look at the portfolio composition of two mutual funds next to their shared benchmark.

The AllianzGI China Equity Fund Class A (ALQAX) and the RS China Fund Class A (RSCHX) benchmark their performance to the MSCI China Index. The MSCI China Index is composed of stocks listed only in China. With 143 constituents, the index covers about 85% of China’s equity universe.

Stocks from the financial sector form a big chunk of both funds, making up 42.3% of ALQAX while forming 37.9% of RSCHX. Meanwhile, 40.9% of the MSCI China Index comprises of financials stocks as of September 30, 2015.

Tencent Holdings (TCEHY), China Mobile (CHL), and CNOOC (CEO) are included in the top ten holdings of the MSCI China Index and made up 23.5% of the portfolio’s total weight as of September 30, 2015.

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Portfolio composition

ALQAX is heavy on the industrials and information technology sectors, which make up 19.9% and 16.2%, respectively, of its portfolio. ALQAX has no exposure to the energy and utilities sectors, with only 0.4% exposure to the materials sector.

The top three holdings of ALQAX include China Life Insurance Company (LFC), Tencent Holdings (TCEHY), and China Mobile (CHL), which formed 23.3% of the fund’s total portfolio as of September 30, 2015.

Apart from financials, the other top three sectors of RSCHX were information technology, telecommunication services, and consumer discretionary, with weights of 11.6%, 10.8%, and 10.5%, respectively, as of September 30. The fund has exposure to stocks of Tencent Holdings (TCEHY), China Mobile (CHL), and CNOOC (CEO), which formed 20.6% of the fund’s total portfolio on the same date.

Comparisons to benchmark

The portfolio composition of RSCHX replicates its benchmark, but ALQAX has a different composition than that of its benchmark. The following breakdown of top holdings should give you a sense of the difference between these two portfolio compositions relative to their benchmark:

  • 40.9% of the MSCI China Index is made up of financial stocks
  • 13.5% of information technology stocks
  • 11.6% of telecommunication services stocks

In the next part of this series, we’ll move to the portfolio compositions of our two other selected funds—the US Global Investors China Region Fund Investor Class (USCOX), and the AC One China Fund Investor Class (ACOCX).

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