China’s star manager hopes for redemption as all 4 funds with US$16 billion in assets suffered losses in 2021

Name: Chinese Communist Party resolution cements Xi Jinping leadership, putting him on par with Mao
Uploaded: 2022-01-02T23:30:27.000Z
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Description: Chinese Communist Party resolution cements Xi Jinping leadership, putting him on par with Mao

All four funds managed by Zhang Kun at E Fund Management suffered losses ranging from 8.2 per cent to 31 per cent in 2021, ending two years of stellar winnings

He is responsible for US$16.7 billion in assets, the most cash managed by any portfolio manager in mainland China

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People walk on the street next to the large screen showing stock data in Shanghai in November 2021. Photo: EPA-EFE

Zhang Shidong

Published: 7:30am, 3 Jan 2022Updated: 8:40am, 3 Jan 2022

By some yardsticks, 2021 was a disastrous year for Zhang Kun, the star investor at E Fund Management who manages the biggest amount of cash among all equity managers in mainland China.

All four of his equity funds incurred losses, ending two years of stellar winnings and underperforming the flattish MSCI China Onshore Index. This would suggest that the days of easy money and skyrocketing Chinese stocks may be over, as investors struggle to overcome a torrent of regulatory crackdowns at home and economic turbulence caused by the Covid-19 pandemic globally.

His flagship US$11.1 billion Blue Chip Selected Mixed Fund lost almost 10 per cent last year, after earning 95 per cent in 2020 and 56 per cent in 2019 for his investors, according to Bloomberg data. Not surprisingly, the US$691 million Asian Elite Fund that invested in Chinese stocks in offshore markets lost 31 per cent, the worst of the lot.

Zhang Kun, the star investor at E Fund Management who manages the biggest amount of cash among all equity managers in mainland China. Photo: Handout

But Zhang is not alone in facing headwinds. China’s attempts to rein in so-called “barbaric” growth in private capital and to curb the influence of billionaires have crashed and burned many technology champions, from Alibaba Group Holding to a host of tech-education firms.

All told, more than US$1 trillion of market value was lost as President Xi Jinping strengthened his grip on the Communist Party in its centennial year.

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Chinese Communist Party resolution cements Xi Jinping leadership, putting him on par with Mao

“Some companies with decent business track records have seen significant declines recently, because of concerns about a slowdown in the economy and corporate earnings, and policy uncertainty,” Zhang said in his most-recent quarterly report to fund investors. “If put into a portfolio, these companies are expected to deliver visible compound growth rates in the next three to five years.”

Zhang, who is based in Guangzhou in China’s southern Guangdong province, managed about US$16.7 billion in assets in the four funds at the end of 2021, according to Bloomberg data. He has about 13 years of experience in the industry, after a stint as an analyst and an assistant to money managers at E Fund Management.