Jim Oberweis, president of Oberweis Asset Management, launched the Oberweis China Opportunities Fund (OBCHX) in 2005, when there were barely any Chinese stock offerings available to international investors outside of export oriented, state-owned companies in the manufacturing sector and some state-owned banks.
Nearly a decade later, the Chinese equity scene is vastly different and investors have an abundance of stocks of all kinds from which to choose. But being ahead of the curve in terms of viewing the potential of China to develop into a market driven by the improving lifestyles and changing tastes of a middle class that has grown in leaps and bounds has paid off for Oberweis. The $212 million China Opportunities Fund is now a five-star Morningstar fund and has consistently outperformed its category peers over the past years.
“We always believed that exports would be a hard way for Chinese companies to make money in the long-term, because countries like Vietnam, Indonesia and so on would be cheaper and have stayed that way, since wages and income are still low there,” Oberweis said, “but in China, what was important for us was the development of brands and the consolidation of consumption industries into major brands. Because of that, we thought there was an opportunity to look beyond state-owned enterprises to entrepreneurial companies that were consolidating industries and building brands as the Chinese middle market evolved. The strategy has worked well for us and we’re still doing the same thing today.”
Now, China’s conversion into a consumption-driven economy is a given investing theme for many portfolio managers, but because he set on the path early, Oberweis still enjoys an edge over others. The fund leverages off a team of China experts, two of which are based in Mainland China and the other two in Hong Kong, all of whom know the lay of the land. Their expertise in the region means they can look at China in a close, hands-on manner, Oberweis said, and sniff out the smaller societal changes that are occurring or that will happen as its economics continue to change China.