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Fund Spy

Top Fund Managers Retreat From China in the Third Quarter

Morningstar Medalist funds largely sold regulation-impacted businesses.

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Top-rated fund managers in the third quarter of 2021 trimmed their stakes in companies affected by China's new regulations that took aim at a swath of industries. For some managers, the new regulations were a game changer, with such encroachment and meddling by the Chinese Communist Party making industries or even the entire market uninvestable. For others, the developments reflect the reality of doing business in China, a market that goes through cycles of major regulatory changes every few years but continues to have strong long-term potential, and the recent sell-off represented a buying opportunity. To get a sense of how top fund managers in the aggregate traded the recent news, we looked at third-quarter portfolio changes of all open-end funds with at least one share class with a Morningstar Analyst Rating of Bronze or higher and a reported portfolio as of Sept. 30, 2021.

Jack Shannon does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.