China-focused MFs: Take limited exposure, watch out for policy shifts

The stressed real estate sector, a key driver of the economy, has not yet stabilised

The Hang Seng Index has risen 18.8 per cent in the past three months and 43.1 per cent over the last year. China-focused mutual funds available in India have delivered between 22 and 71 per cent returns over the past year.

 

Diversify across emerging markets

 

Exposure to China allows Indian investors to diversify beyond domestic markets. “Investing beyond one’s home country enhances portfolio diversification,” says Niranjan Avasthi, senior vice-president, Edelweiss Mutual Fund.

 

“Indian investors get exposure to sectors not well developed in India,” says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.

 

A volatile market

 

China’s markets have long been