China Mutual Funds

Retail mutual funds investing in China are scoring big gains in 2006. Here are 5 Top-performing mutual funds and one exchange traded fund with their year-to-date gain percentage:

Oberweis China Opportunities Fund (OBCHX) 53.1%;
Old Mutual Clay Finlay China (OMNAX) 48.2%;
John Hancock Greater China Opportunities (JCOAX) 42.9%;
Dreyfus Premier Greater China (DPCAX) 42%;
Matthews China Fund (MCHFX) 36%.

The iShares FTSE/Xinhua China 25 Index (FXI) ETF had year-to-date gain of 39.4%. It tracks the 25 largest and most liquid Chinese companies trading on the Hong Kong exchange.

Fidelity China Region Fund (FHKCX) gained relatively smaller percentage of 19.7% but we like it better because of its very balanced and diversified portfolio which can be sustained over a long term. The top performing fund Oberweis is only one year old and it focusses on small-cap and midcap stocks that stand to benefit from China's growing consumer class, but such a portfolio is too risky to carry on over a long time horizon. Oberweis' phenomenal gain may soon be followed by too much of volatility which might offset its recent gain to bring it down to a reasonable level of long term growth.
[Disclosure: We donot own any of these funds in our personal portfolio]