Zhang Kun, China’s biggest fund manager, has latched onto the country’s biggest companies—from Tencent Holdings to Kweichow Moutai—and is betting that their moating advantage will deliver sustainable returns over time, as the economy recovers, despite a dismal second-quarter showing, reports the South China Morning Post.
The social-media and gaming company and the distiller were the two biggest holdings of E Fund Blue Chip Selected Mixed Fund, Zhang’s RMB 49.2 billion ($6.9 billion) flagship fund, over the second quarter, according to a quarterly portfolio report published on the E Fund Management website on Thursday. Tencent and Kweichow Moutai each accounted for 9.9% of the fund’s total assets, the maximum allowed for a stock in a single fund’s portfolio. Their holdings were unchanged from the first quarter.
The strategy of holding the most valuable companies has, however, not yet paid off for Zhang, with his flagship fund losing 10.9% of its value in the second quarter. The CSI 300 Index of China’s biggest onshore stocks fell 5.2% in the same time span, while Hong Kong’s Hang Seng Index dropped 7.3%. Tencent and Kweichow Moutai slumped by 14% and 7.1%, respectively.
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