Topic: Under the impact of market volatility and the correction pressure, active healthcare equity funds in China have seen a wider performance gap.
Author: InvesTAO Research
- In Q3 the Chinese healthcare sector experienced a market correction after leading the YTD performance among sectors with a significantly higher capital net inflow. The market correction was mainly induced by a certain degree of valuation difference relative to other industries.
- Experienced healthcare portfolios managers maintain a bullish view on the sector mid to long term. They particularly like companies with a clear business model and confirmed a comparative advantage.
- Actively managed healthcare funds, though underperformed against the benchmark in Q3, have maintained their outperformance against the general equity fund market by a large margin.
- Some fund managers’ incompetency of weathering through a market downturn has been exposed. The YTD return from the top-performing active healthcare fund is 78% higher than the bottom one. As such, selecting the right manager in the right sector under the wrong time is critical when trying to generate Alpha.