SHANGHAI (Reuters) – Following an ill-timed launch, a Chinese fund that promised to offer global investors a “golden” opportunity to buy Chinese education stocks has dropped more than 40% this month, on track to become the country’s worst-performing mutual fund in July.
Beijing last week barred tutoring for profit in core school subjects to ease financial pressure on families, a move that spooked investors in China’s $120 billion private tutoring industry.
Reflecting those fears, the Bosera CSI Global China Education ETF, the country’s only exchange-traded fund dedicated to the education industry, ended Friday at 0.537 yuan per fund unit, almost half the value on its June 17 debut.
The slump in the education ETF, which invests in 50 major Chinese education companies listed in New York, Hong Kong and mainland China, also underscores the risk of outbound investment products in China.
The fund’s portfolio companies, including New Oriental & Technology Group and China Education Group Holdings, crashed in the wake of the the government’s crackdown.
The ETF currently manages 176 million yuan ($27.25 million)worth of assets, according to Reuters calculation.
The heavy loss contrasts sharply with the fund’s optimism during launch.
The ETF, which operates under the outbound QDII scheme, allows investors to buy Chinese education companies listed globally, accessing a “golden race track” that benefits from policy support and growing demand, the fund manager said at the time.
The ETF’s manager, Bosera Asset Management Co, declined to comment.
In an exchange statement, Bosera said the fund’s unit value may suffer heavy volatility in the future and cautioned investors against risks.
($1 = 6.4579 Chinese yuan renminbi)
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Sonali Paul)