AsianInvestor recently carried out 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. They all have strong convictions and an ability to make good decisions.
Our list comprises three managers of public mutual funds and seven on the private markets side.
Many private markets managers started life in the public arena, building a good 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 working on the private markets side 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 ($201.5 billion).
Market-neutral strategies have enjoyed a boost in perception given the recent equity market swings, although few private securities managers engage hedging tools beyond index futures.
Managers are allowed to borrow and short-sell a select range of stocks, but are generally deterred by limited availability, regulatory scrutiny and cost.
Nevertheless, these managers merit recognition for seeking to develop more sophisticated strategies in a market with limited hedging tools.
Here we profile the fifth private markets manager to make our list, Wang Yawei of Qianhe Capital.
Wang Yawei, chairman, Qianhe Capital
The China Large-cap Selection fund that Wang Yawei managed at China Asset Management Company from 2005 to 2012 delivered a ten-fold return, against 133% for the CSI300.
Wang left China AMC to set up Shenzhen Qianhe Capital Management and Top Ace in Hong Kong. Qianhe has since launched five private trust funds, the first, Yun Feng, in late 2012 at a time when the CSI300 Index had dropped below 2,000 points.
Wang still raised Rmb2 billion, and Qianhe was one of the top 10 private fund managers by assets as of the end of the first quarter of 2015, according to data from Gesafe.
Since inception Yun Feng has generated 116% in absolute terms and 25% this year to July 31, according to online distributor JFZ.com. It targets wealthy investors with a minimum of Rmb10 million.
Wang disappeared from public view following his resignation from China AMC. At the time he spoke of feeling pressure from the media glare and public attention.
He likes to invest in insurance companies and banks, which he favours on valuation and dividend grounds. He also likes environmental stocks because the sector is driven by state investment, but has generally avoided ChiNext listings on valuation grounds, although he acknowledges China’s internet industry will provide opportunities.
Wang's style is to target undervalued stocks whose share prices can be turned around. As a safeguard, he has adopted a multiple-strategy approach in a drive for flexibility and diversity following a three-month studying stint at Wharton in the US in 2005.
Previously highlighted from the list of top 10 China stock pickers: