German actively managed equity funds invested in stocks in the Asian Pacific region, excluding Japan, and North America, have outperformed the benchmark in the first half of the year, according to research conducted by rating agency Scope.

Over half of the funds invested in Asia Pacific (53.4%) and North America (50.4%) equities outperformed the benchmark this year. The Asia Pacific equity funds peer group recorded the highest outperformance ratio in the first six months of this year, it said.

The weight of the six largest countries in Asia in the benchmark index MSCI AC Asia Pacific excluding Japan was more than 86%, with China accounting for 37% of the group alone.

The overall outperformance ratio of the more than 2,030 equity funds researched by Scope, however, was 38% in the first half of this year, compared with 46% in 2020.

Scope noted that one reason for a lower outperformance ratio in 2021 for equity fund managers was that Chinese and technology stocks lost momentum. The equity market in China has reversed its good start of the year at the end of June, in parallel with regulatory measures taken by the Chinese government to crack down on tech companies.

The average exposure of German active managed equity funds to Chinese stocks in the group Equities Asia Pacific is slightly more than 29%. Chinese tech giants Tencent and Alibaba, Taiwan Semiconductor and Samsung are the top four positions in the index with a weight of over 15%, it said.

German equity funds that outperformed the benchmark index in the first six months are in some cases heavily invested in Australia, and at the same time opted to underweight China. Allocations to Australian stocks performed well (9.6%) compared to China (1.8%), with an index weight of 13.9%.

German equities worsen

While for emerging market equity (49.6%) the share of funds outperforming rose year-on-year in H1, for Japanese (46.2%), European (38.5%), world (28.2%) and German (27.3%) equities, the outperformance ratio decreased this year compared with 2020.

Funds invested in German equities in particular saw the outperformance ratio drop from 50% last year to 27.3% in the first six months of this year, the lowest figure of all groups examined.

Small cap equities listed on the MDAX or SDAX indexes have performed significantly worse than the DAX since the beginning of the year, Scope noted.

World equities, with more than 800 actively managed funds examined, achieved an outperformance ratio of 28% in the first half of 2021 compared with 45% last year.

Scope has compared eight equity fund peer groups to examine the share of actively managed equity funds able to beat the benchmark index in the first half of 2021.

In the first six months of this year, 773 actively managed equity funds, excluding ETFs and index funds, from the eight peer groups analysed outperformed their respective benchmark index.

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