Bad China bets ruin 2012 for Asia's star fund managers

Bad China bets ruin 2012 for Asia's star fund managers
Above photo is Franklin Templeton's Mark Mobius.

HONG KONG - The Warren Buffetts of the East failed to live up their reputations in 2012, when big-name investment gurus made the wrong calls on China while markets in India and Southeast Asia raced ahead to rank among the top performers globally.

Between January and November this year, Franklin Templeton's Mark Mobius and Value Partners' Cheah Cheng-hye fell short of their benchmarks by the widest margins in more than a decade, data from Thomson Reuters Lipper showed.

Sustained underperformance by the top names could push investors towards cheaper, passively managed index and exchange traded funds (ETFs), a trend that has taken hold in Europe and the United States where active funds find it tougher to exceed benchmarks.

"The (Chinese) economic slowdown in 2012 certainly had a negative impact on the consumer sector, an area I am overweight," Fidelity's Anthony Bolton, another star portfolio manager who failed to beat his benchmark during the period, told Reuters in an email.

"The fund's focus on small and mid-caps also hurt performance," said Bolton, who returned three years ago amid much fanfare to chance his arm in China.

All three A-listers were undermined by their bets on China, whose stock market, measured by top Shanghai and Shenzhen listings CSI300, fell 8.8 per cent through November on fears of economic slowdown, and as a once-a-decade political leadership change was completed in that month.

The index has since rebounded and is now up 4.5 per cent for 2012.

By contrast, share markets in the resilient Southeast Asian economies have rallied, and Indian shares have risen by a quarter so far this year, helped by US$24 billion (S$29 billion) foreign portfolio inflows.

Bolton's Fidelity China Special Situations was up 5.8 per cent in the 11 months to end-November, 8 percentage points behind its benchmark MSCI China index.

That came after missing its gauge by nearly 18 percentage points last year.

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