Analysis of US and China Fund Performances

 

The performance of international funds, particularly those focused on the US and China, has been a topic of growing interest for Indian investors looking to diversify their portfolios. The data highlights the returns of the top US equity, bond, and China equity funds over various timeframes and their corresponding AUM (Assets Under Management).

 1. US Equity Funds

Performance Highlights:

• Top Performers in the Last 6 Months:
• Navi US Total Stock Market FoF led with a return of 25.70%, reflecting its broad market exposure in the US.
• Navi NASDAQ 100 FoF followed closely with a return of 24.00%, benefitting from its focused allocation in tech-heavy NASDAQ.
• Top Performers in the Last 1 Year:
• Mirae Asset NYSE FANG+ ETF outperformed with a stellar return of 50.40%, driven by the growth of leading US tech companies like Amazon, Google, and Meta.
• Edelweiss US Technology Equity FoF secured a return of 34.80%, underlining the strength of the tech sector.
• Long-Term Performance (3 Years):
• Mirae Asset NYSE FANG+ ETF delivered 20.30%, significantly ahead of peers, proving its resilience and growth-oriented strategy.

Key Observations:

• Category Average Returns:
• Over 6 months: 20.20%.
• Over 1 year: 33.90%.
• Over 3 years: 12.30%.
• Funds focused on the NASDAQ 100, such as Kotak NASDAQ 100 FoF (22.40%) and Motilal Oswal NASDAQ 100 ETF (12.10%), showed consistent returns, supported by the robust performance of US technology companies.
• Larger AUM funds like Motilal Oswal NASDAQ 100 ETF (₹8,223 Cr) demonstrated stability, albeit with slightly lower returns compared to smaller, more focused funds.

 

2. US Bond Funds

Performance Highlights:

• Top Performers in the Last 6 Months:
• ABSL US Treasury 1-3 Year Bond ETFs FoF delivered the highest return of 7.90%, reflecting stability and favorable interest rate movements.
• Bandhan US Treasury Bond 0-1 Year FoF followed with 7.20%, emphasizing its focus on short-term US treasuries.
• One-Year Returns:
• The category average return stood at 6.30%, with relatively consistent performance across funds.

Key Observations:

• Category Average Returns:
• Over 6 months: 6.90%.
• Over 1 year: 6.30%.
• US bond funds are emerging as a stable investment option for conservative investors seeking exposure to US treasuries, with steady but modest returns.
• Funds with smaller AUMs, such as DSP US Treasury FoF (₹67 Cr), managed to maintain competitive returns, indicating efficient fund management despite their size.

 

3. China Equity Funds

Performance Highlights:

• Top Performers in the Last 6 Months:
• Mirae Asset Hang Seng TECH ETF delivered a strong 7.30%, capitalizing on the resurgence in China's tech sector.
• Nippon India ETF Hang Seng BeES followed with 4.40%, reflecting improved sentiment in the Hong Kong market.
• Top Performers in the Last 1 Year:
• Nippon India ETF Hang Seng BeES achieved 17.80%, leading the category.
• Mirae Asset Hang Seng TECH ETF posted 11.20%, benefitting from recovery in Chinese technology stocks.
• Long-Term Performance (3 Years):
• Most China-focused funds underperformed, with category average returns at -6.00%, signaling long-term volatility and challenges in the Chinese market.

Key Observations:

• Category Average Returns:
• Over 6 months: 11.50%.
• Over 1 year: 15.20%.
• Over 3 years: -6.00%.
• The negative long-term returns indicate geopolitical and regulatory challenges affecting the Chinese market, impacting investor sentiment.
• Funds like Edelweiss Greater China Equity Off-Shore Fund (-9.90% over 3 years) highlight the challenges of investing in China-focused equity markets.

 

Key Takeaways for Investors

1. US Equity Funds:
• Best suited for long-term investors seeking exposure to high-growth sectors like technology.
• Funds like Mirae Asset NYSE FANG+ ETF and Edelweiss US Technology Equity FoF offer robust returns driven by the dominance of US tech companies.
2. US Bond Funds:
• Provide steady returns with minimal risk, making them an attractive option for conservative investors or those seeking portfolio diversification.
3. China Equity Funds:
• Despite short-term recovery, long-term performance has been lackluster due to geopolitical tensions and regulatory uncertainties.
• Investors should tread cautiously and allocate selectively to high-potential sectors like technology.

 Conclusion

The analysis of US and China-focused funds highlights a stark contrast between the two markets. While US equity and bond funds offer stability and consistent returns, Chinese equity funds remain volatile with significant long-term challenges. Investors must evaluate their risk appetite and investment horizon carefully before allocating capital to these funds. Diversifying across both regions can be an effective strategy to leverage growth opportunities while mitigating risks.