(Bloomberg) -- A macro fund of M&G Investment Management Ltd. loaded up on Chinese stocks last month, taking advantage of the heavy selloff, which further cheapened valuations.

“We took a pretty aggressive bet in January in China equities,” fund managers Gautam Samarth and Stuart Canning, who help oversee M&G (Lux) Episode Macro Fund and more than $4 billion in separate accounts, told Bloomberg News in an interview. “We now have 15% of net asset value in China stocks” compared with almost zero in December, they said on Friday.

The duo took net bullish positions in the Hang Seng Index and Hang Seng China Enterprises Index, making China one of their biggest exposures. 

After a record six months of overseas outflows, mainland shares have lured more than 43 billion yuan ($6 billion) of inflows via the trading links with Hong Kong this month. The number though may have been boosted due to purchases by offshore accounts of Chinese state-owned enterprises. That has turned Chinese stocks into the world’s best performers this month after a painful run of losses last year. 

M&G’s purchases in Chinese shares have helped the fund offset some losses from its holdings of Western economies’ government bonds. While it’s down 2% year-to-date, it ranks above 96 percentile of its peers over a three-year period.


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