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Fidelity China Special Situations reported returns that underperformed its benchmark's returns in the first half of the year as the regulation action in China dented equity markets.
For the six months ended 30 September 2021, net asset value decreased by 16.9% compared with a 14.4% decline in MSCI China Index, the company's benchmark.
'Well-publicised concerns over increasing regulation were a major factor in the Chinese markets' decline during the reporting period,' the company said.
'Looking forward, it is important to be focused on the risks in China and to follow regulatory developments closely,' it added.
'In addition, developments in the property sector will be keenly monitored as this has been a significant driver of both economic growth and of local government finances, and a major component of the health of the consumer balance sheet.'