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China Education Fund Bottom of the Class after Tutoring Crackdown

Bosera CSI Global China Education ETF on track to be July’s worst mutual; ETF’s portfolio includes the New Oriental and China Education Group


Children leave a school in Shekou area of Shenzhen, Guangdong province, China. Photo: Reuters

• Bosera CSI Global China Education ETF on track to be July’s worst mutual

• ETF’s portfolio includes the New Oriental and China Education Group

 

A Chinese fund that promised to offer global investors a “golden” opportunity to buy the country’s education stocks has dropped more than 40% this month – after launching just before Beijing’s crackdown on the tutoring industry. 

The Bosera CSI Global China Education ETF is now 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.

 

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Reflecting those fears, the country’s only exchange-traded fund dedicated to the education industry, ended on Friday at 0.537 yuan per fund unit, almost half the value of 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 and Technology Group and China Education Group Holdings, crashed in the wake of the the government’s crackdown.

 

LAUNCH OPTIMISM

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.

 

  • Reporting by Reuters

 

Read more:

Regulatory Storm Triggers $2.6bn Outflow, China State Media Urge Calm

China Private Equity Firms ‘Waiting for Death’ After Tutoring Crackdown

 

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