The Jupiter China fund (GB00B1DTDX49) has been listed for a second time among Bestinvest's Spot the Dog list of underperforming funds. Even worse, it was the runt of the litter among the Asia Pacific Dog funds, with a three-year return of just £89 on a £100 investment, despite the benchmark (MSCI Zhong Hua index) having strengthened over the same period.
The fund is a feeble fourth-quartile performer over three and five years, but does better over one year with a more respectable second-quartile position. Philip Ehrmann, manager of the fund, blames the fund's poor performance on political uncertainty in 2012, which he claims "muddied the waters for investors".
"The once-in-a-decade change in the leadership of the Chinese Communist party was viewed by many political commentators as a dangerous moment for the country because of the deep internal divisions within the party," he says.
The fund has also suffered because smaller growth companies in particular have been hit hard, with valuations for some of them back down to levels not seen since the country was engulfed in the SARS crisis in 2002 when a viral respiratory illness caused widespread panic and a flight of foreign capital.
But Mr Ehrmann believes now is a good time to get in cheap. "Shares in Chinese companies, in our view, are cheap at a time when stock market performance is set to improve markedly. Chinese stocks remain in my view very attractively priced. Valuation levels have dropped significantly with the share price of stocks on the MSCI China Index trading on average well below what you might expect in the light of anticipated earnings," he added.
