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Portfolio Composition of China-Focused Mutual Funds: USCOX and ACOCX

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Introduction

The US Global Investors China Region Fund Investor Class (USCOX) benchmarks its performance to the Hang Seng Composite Index. The Hang Seng Composite Index covers about 95% of the total market capitalization of companies listed on the Hong Kong Stock Exchange.

Meanwhile, the AC One China Fund Investor Class (ACOCX) has no stated specific benchmark.

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Portfolio composition

The financial sector dominates both the US Global Investors China Region Fund Investor Class (USCOX) and the AC One China Fund Investor Class (ACOCX). This sector made up 32.7% of USCOX while it formed 25.8% of ACOCX as of September 30, 2015.

USCOX has ~19.0% of its assets invested in cash equivalents and other securities. It has exposure not only to China, Hong Kong, and Taiwan, but also to Korea, the Philippines, and Indonesia.

Other portfolio differences

USCOX is heavy on the industrials sector, which makes up 11.2% of its portfolio. USCOX has no exposure to energy sector, whereas ACOCX has 4.7% weight in the energy sector. The top three holdings of USCOX include Tencent Holdings (TCEHY), China Construction Bank Corporation (CICHY), and AIA Group (AAGIY), which together made up 17.7% of the portfolio’s total holdings as of September 30, 2015.

ACOCX is heavy in the information technology sector as well as in consumer discretionary, consumer staples, and telecommunication services, which made up 20.3%, 13.2%, 10.1%, and 7.9%, respectively, of the fund’s total portfolio, as of September 30.

ACOCX’s holdings include Tencent Holdings (TCEHY), Alibaba Group Holding (BABA), Lenovo Group (LNVGY), and CNOOC (CEO).

Hang Seng Composite Index

The top three holdings of the Hang Seng Composite Index include HSBC Holdings (HSBC), Tencent Holdings (TCEHY), and China Mobile (CHL), which make up 21.2% of the index’s total portfolio.

The composition of the USCOX is different from that of the Hang Seng Composite Index—except in the financials sector, which is the dominant sector for both the fund and the benchmark. The fund, however, has less weight in financials, with stocks from the sector making up 32.7% of its total portfolio, compared to 37.8% of the benchmark index.

In the next and final part of this series, we’ll continue analyzing our four selected China-focused mutual funds in 3Q15, providing insight for investors.

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