No. 1 China Equities Fund Bought Only Three Stocks This Year

J

jhehe

Link to article: https://www.bloomberg.com/news/arti...ities-fund-bought-only-three-stocks-this-year

Discussion:

While some funds go out of their way to hedge or offset risk, doesn't Cederberg have a huge exposure if any one of the three companies they hold underperform? If I'm understanding this correctly, Alibaba would be considered specialty retail, Tencent as tech, and Tong Ren Tang as pharma. That's diversification in just three sectors, could the keep it simple approach be best or is this fund just taking on huge risks without realizing the consequences yet?
 
jhehe said:
Link to article: https://www.bloomberg.com/news/arti...ities-fund-bought-only-three-stocks-this-year

Discussion:

While some funds go out of their way to hedge or offset risk, doesn't Cederberg have a huge exposure if any one of the three companies they hold underperform? If I'm understanding this correctly, Alibaba would be considered specialty retail, Tencent as tech, and Tong Ren Tang as pharma. That's diversification in just three sectors, could the keep it simple approach be best or is this fund just taking on huge risks without realizing the consequences yet?
More...

First they own more than 10 stocks. They bought three this year.

Yes. They run the risks you highlighted. If they are right they will outperform. If they are wrong they will not.

I met a manager of a multi billion dollar value hedge fund a few years ago. They had something like 30 stocks in their portfolio with a holding period of seven years. They outperformed the spx by about 7 percent/year. But they would only add 3-4 stocks/year and could go months without tradin anything.
 
newwurldmn said:
First they own more than 10 stocks. They bought three this year.

Yes. They run the risks you highlighted. If they are right they will outperform. If they are wrong they will not.

I met a manager of a multi billion dollar value hedge fund a few years ago. They had something like 30 stocks in their portfolio with a holding period of seven years. They outperformed the spx by about 7 percent/year. But they would only add 3-4 stocks/year and could go months without tradin anything.
More...

Ah that makes sense. I guess in the nature of funds, fund managers are free to pursue whatever "investment opportunities" they see fit to a certain extent.
 
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