Chen Shide is beating all mutual funds investing in China by buying shares of Shanxi Xinghuacun Fen Wine Factory Co. and Yantai Changyu Pioneer Wine Co., which are benefiting from growing personal incomes.
Chen’s 1.69 billion yuan ($212 million) Guangfa Small Cap Growth Equity Fund has returned 101 percent over the past 12 months. That is more than double the gain, including reinvested dividends, of the Shanghai Composite Index. It is the top mutual fund among 346 open-end China equity funds that are tracked by Bloomberg.
“My sole criteria for selecting small-cap stocks is stable earnings growth,” said Chen, 40, a fund manager with GF Fund Management Co. in Guangzhou, in a telephone interview. “The earnings growth for consumer stocks will be quite sustainable and impressive in the coming couple of years.” [Full Text]