Henderson’s Awdry vows to improve stockpicking
Henderson China Opportunities manager Charlie Awdry has said he is “working on putting right” stock picks that have caused his fund to underperform.
Mr Awdry’s £593.9m Henderson China Opportunities fund lost 22.2 per cent in the year to June 8 – almost as severe as the 28.2 per cent loss on Anthony Bolton’s Fidelity China Special Situations investment trust over the same timescale.
While Mr Bolton attributes his losses to a focus on small and medium-sized companies, and the trust’s use of leverage to boost its exposure to the market, Mr Awdry said his stock selection was at fault.
“The past 12 months have been tough for the fund,” he said. “Some of the stocks we had didn’t perform well, which was disappointing in terms of stock selection, but we are working to put that right.”
Among the detractors has been Nasdaq-listed Chinese language search engine Baidu, which is estimated to control an 80 per cent share of the Chinese search engine market.
In March, Chinese news sites reported that Apple was set to make Baidu its default search engine for Chinese users of devices such as iPads and iPhones by April.
But a short-term fillip from this news failed to offset a
longer-term pattern of volatility and decline in the past year. The shares peaked at $164 (£105) in July 2011, but Chinese economic concerns drove them to a close of $117 on Tuesday (June 12) last week – a 28.6 per cent slump.
Mr Awdry also cited China-listed beverages group Yantai Changyu Pioneer Wine, which he said was impacted by
concerns over government plans to curb officials’ purchases of luxury alcohol.
Its shares closed at HK$97.98 in August last year, but on Tuesday they were trading at just HK$69.80 – a 28.8 per cent slide.
Mr Awdry added that the fund had also suffered from not owning certain strong-performing stocks in the past year. These included insurer China Life and internet service portal Tencent, which gained 21 per cent and 27 per cent respectively.
“But we have a neutral weight to those stocks now,” he added.
The manager and the fund –which he launched in 2006 – were both previously based at Gartmore, but they transferred across when Henderson bought the troubled firm last year.
The fund’s one-year performance to June 13 ranked it at the bottom of the IMA China and Greater China sector of open-ended funds, according to FE Analytics, with a loss of 19.9 per cent compared with an average for the sector of 14.3 per cent.
In the longer term, it has reported a five-year gain of 17.2 per cent – slightly worse than the sector average gain of 20.1 per cent. The First State Greater China fund run by Martin Lau gained 62.9 per cent in the same timescale.