AsianInvestor has set out on a project to identify the top 10 portfolio managers in China, those with star quality and a sprinkling of magic. You can find our rationale for this venture by clicking here.
We based our choices on a weighted set of criteria: long-term track record, market experience and applicability of strategy for a changing China. What unites them is an ability to find value, typically in sectors that will drive China’s future growth. These people have strong convictions and an ability to make good decisions.
Overall our list comprises three public mutual-fund managers (featured already on AsianInvestor.net, see below) and seven investment professionals from the private markets side.
Many private markets managers started life in the public arena, where they built a track record before looking for greater investment flexibility and a better profit-share from higher management fees.
They argue the less onerous compliance requirements that come with investing in private markets gives them greater flexibility to execute. Many target undervalued stocks whose share prices stand to be driven by company restructures or turnarounds.
Private sunshine funds – China’s equivalent of hedge funds – have seen assets under management surge 161% this year to June to Rmb1.28 trillion ($201 billion).
Market-neutral strategies have enjoyed a rise in popularity given the recent equity market swings, but few private securities managers engage hedging tools beyond index futures.
They can borrow and short-sell a select range of stocks, but are generally deterred by limited availability, regulatory scrutiny and cost.
Yet such players managers merit recognition for seeking to develop more sophisticated strategies in a market with limited hedging tools.
Here we profile the first private markets manager on our list, George Jiang Jinzhi of Greenwoods Asset Management.
George Jiang Jinzhi, founder, partner and CIO,
Greenwoods Asset Management
Founded by George Jiang in 2004, Greenwoods Asset Management is the largest private securities fund firm in China with $7 billion.
The Shanghai-based firm has eight partners and a 61-strong investment team. It also runs a subsidiary of direct private equity investments, specialising in consumer services, health care and technology, media and telecommunications.
Jiang believes in value investing. He and two of the firm’s partners are also alumni of the financial research institute under the People’s Bank of China and have a deep understanding of, and ability to interpret, domestic monetary policy.
In the onshore market, the firm’s flagship – Greenwoods Prudent Trust – generated a 17.9% return as of July and has made a cumulative gain of 622% since inception in October 2006, according to Gesafe data, well above the benchmark CSI300’s 160.6% over the same period.
In offshore markets, Greenwoods' $1.8 billion flagship long/short Golden China fund has gained 17.06% this year and 1,496% since 2004 as of the end of July.
Jiang has been one of the few Chinese hedge-fund managers running money for overseas institutions, and manages more than $4.9 billion as of July.
Greenwoods was the first Chinese private markets manager to be awarded RQFII quota in Hong Kong, having received Rmb2 billion in August last year. That gave it the ability to manage RMB portfolios for international institutions.
It was also the first China-based private fund manager to register with major international securities regulators, including the US Securities and Exchange Commission and Hong Kong’s Securities and Futures Commission.
Overseas institutions require managers to have a clear strategy, stable team, comprehensive risk management and an institutionalised structure in compliance and operations. Greenwoods has measured up and been winning mandates.
Previously highlighted from the list of top 10 China stock pickers: