In the first six months that Zhao Zifeng took over the China International Fund Management’s $1.6 billion Sitico Morgan First Growth Fund, assets doubled, but a six-week slide that began in October have since taken 20% of profits off of the table and shaken the 37-year-old Zhao confidence somewhat, Today Singapore reports.

“I’m feeling the heat,” Zhao admitted. “As a newcomer, I still need to accumulate the experience dealing with a falling market.”

And Zhao is not alone. More than half of the fund managers have less than two years of experience, and a third have been managing funds for less than a year, according to TX Investment Consulting.

Thirty-six-year-old Li Shuo, who began managing a $134 million fund only a month ago, has been reading about the Internet bubble and the end of Japan’s boom in 1989 in anticipation of the same thing happening in China.

“Fund managers have, so far, been able to deliver returns quite easily with the bull market, but I think that’s about to change,” said Li. “Though I’ve seen market ups and downs as an analyst, it’s still my first time managing so much of other people’s money.”

Although the CSI 300 Index rose nearly 500% over the past two years through November, it plummeted 17% last month alone.

“A prolonged stock market decline will provide a real test for China’s fund managers,” said Tiger Tong, analyst with China Knowledge. “Most of them are momentum investors who just go with a rising market. A continued fall in the market will pose challenges.”

Peter Alexander, a principal with investment management consultancy Z-Ben Advisors in Shanghai, said, “Given the sharp increase in [the] number of fund management and products, it’s only to be expected that the average experience in the industry will decline.” Today, there are 59 investment management companies with $422 billion in assets under management, up from 17 firms at the end of 2001.

“The pool of talent is limited,” said Luca Frontini, chief executive officer of Lombarda China Fund Management in Shanghai. “There’s strong competition for fund mangers, and it’s extremely difficult to hire and retain good managers.”

For now, fund managers are under tremendous pressure to deliver short-term gains because Chinese investors buy and sell mutual funds actively, Tong said. This “has meant buying speculative stocks, even though valuations may be unjustified,” and this, in turn, has helped drive up the market.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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