HOW have China funds fared since their spectacular launch last year? The year of the monkey saw the launch of 17 China funds authorised by the Securities and Futures Commission. As of December, assets under management totalled more than US$666 million. While investors have been drawn by the promise of tapping China's massive economic growth, the short-term results for most funds have been disappointing. The short-term performance of B shares listed on the Shanghai and Shenzhen stock pales in comparison with locally-listed shares. In general, China funds that are heavily invested in B shares have taken a beating. China funds that are more heavily invested in locally-listed China concept stocks have registered better short-term performance. For example, the GT Shenzhen and China fund has shed six per cent of its value over the period from April 1, 1992 to January 25. As of November, 94 per cent of the fund was invested in B shares while the rest was in cash. The Barclays ASF China fund has slipped by seven per cent since May 1. About 43 per cent of the fund is invested in B shares, with 36 per cent in China concept stocks and 21 per cent in cash. Among the better performing funds, the Wardley GSF Chinese Equity Fund, has increased by 24 per cent since July. However, only 18 per cent of the fund's assets are invested in B shares. As of November, 81 per cent of the funds assets were in Hongkong-listed China concept stocks. The JF China Fund has put on seven per cent over the same period. About 85 per cent of the fund is invested in Hongkong stocks and 15 per cent in China. The poor short-term performance of some funds is not surprising given the volatility of China's emerging markets. Prices for Shenzhen B shares went up in March and April 1992, only to plunge in May. Prices on the Shanghai exchange rallied in May, and skidded downwards until their recent recovery. In Shanghai, the Credit Lyonnais B Share index closed out the year of the monkey at 1,043 points, up only four per cent. In a scene not unsimilar to that found on Hongkong's trading floor, red-shirted dealers ramped shares at the last moment to close outthe year on a high note of 1,043 points. Shenzhen B shares have been more volatile, but have performed better over the year. The Credit Lyonnais Shenzhen B shares index crept up by 19 per cent to close out the Lunar Year at 1,189.7 points on January 19. Adding to the problem of market volatility, fund managers are also faced with the problem of too few investment vehicles. ''The problem with China funds, is that they have all got too much money and no where to go,'' said Mr Peter Everingtion, managing director of Regent Fund Management. He said there were about 30 China funds funds with assets of US$1.7 billion chasing 18 B shares. He also questions the earnings forecasts for many B shares that has underpinned their high price earnings levels. ''The price earnings ratios are based on accounting principles that probably over-estimate earnings. Second, the economy appears to be overheated, the brakes are already on.'' ''The long-term story is fantastic,'' said Mr Everington. ''But why not wait until Deng [Xiaoping] dies. In the next two years there will be better buying opportunities.''