SHANGHAI (Dec 24): Value investing is proving to be a profitable strategy in one of the world’s worst-performing stock markets, where a gush of momentum-chasing retail money has created boom-bust cycles.

The US$442-million ($607.4 million) Bank of Communications Schroder Alpha Core Mixed Fund, which focuses on picking out bargain stocks in China’s onshore market, has returned 159% over five years. That’s more than triple the total return by the CSI 300 Index of Shanghai and Shenzhen-traded shares. The fund, managed by He Shuai, has beaten all its peers in that period, according to data compiled by Bloomberg.

He relies on proprietary research to look for companies with sustainable business growth and earnings models. Limited information and research coverage leaves many stocks off investors’ radars, he said, declining to comment on specific companies, citing market regulation.

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