What a difference a year makes. Baring Asset Management’s China Absolute Return fund last month dropped 8.4%, leaving it down 18.83% year-to-date. The four-year-old fund is on pace for its worst year ever after returning 38.58% last year.

Last month, Chinese markets continued to feel the effect of the higher crude oil price and weaker global equity markets, according to the firm. Investor sentiment was also affected by the energy price liberalization policy announced by the Chinese government.

“The equity market, as measured by the MSCI China Index, fell by 12.2% during the month in U.S. dollar terms. The power generation and telecom sectors were particularly weak performers, with power companies hit by the tariff increase and telecoms affected by government-imposed restructuring,” said the firm.

Going forward, Baring said it has become more cautious on the outlook for the equity market in China over the near term since the short-term downturn, against a background of long-term growth, “may be more challenging than we previously thought.”

The US$40 million fund began trading in July 2004 and is listed on the Irish Stock Exchange.