All China open-end mutual fund categories except for money market portfolios posted losses in March, according to data from Lipper.

The equity, mixed-asset aggressive, mixed-asset flexible, and mixed-asset balanced categories lost 17.15%, 14.78%, 14.39%, and 12.39%, respectively. Bond funds lost 0.54% on average.

Qualified domestic institutional investor (QDII) funds, although down 9.58% on average, performed better than A-share funds, proving the benefits of diversification this time around. The stronger performance in Hong Kong and US markets should support the performance of QDII funds.

Net redemptions of qualified foreign institutional investor (QFII) A-Share funds continued in March, but not as severe as in previous months. Decreasing net asset value and net redemptions caused QFII assets to decline to $5.945 billion last month from $6.66 billion in February.

QFII funds lost 16.39% on-average in March, in yuan terms, performing a little better than domestic equity funds. The average loss of QFII funds in the last six months is 29.35%.

China launched the QFII programme in mid-2003 to allow approved foreign institutions to trade A-shares and bonds on the Shanghai and Shenzhen exchanges. The programme was part of the governmentÆs efforts to open ChinaÆs capital market and ease controls on the capital account, under which the yuan isnÆt fully convertible.

Average performance of fund groups in China in March:

Equity China -17.15%
Mixed Asset CNY Aggressive -14.78%
Mixed Asset CNY Flexible -14.39%
Guaranteed -6.34%
Mixed Asset CNY Balanced -12.39%
Mixed Asset Other Conservative -5.93%
Bond CNY -0.54%
Money Market CNY +0.22%
Target Maturity -11.55%

Top performing QFII funds in March:

PCA China Dragon A Share Equity A-1 Class C -11.57%
Nikko AM China A Stock Fund -14.58%
Nikko China A Share Fund -14.61%
APS China A Share -15.48%
JF China Pioneer A-Share -15.67%
ING China A Share Fund -16.73%
Hang Seng China A-Share Focus -17.42%
Morgan Stanley China A Share Fund -17.44%
iShares FTSE/Xinhua A50 China Tracker -17.69%
W.I.S.E. - CSI 300 China Tracker -17.85%
Hang Seng China A-Share Focus -18.50%
ABN AMRO China A Share Fund -19.13